VIVEK RAJU IS DEFINATLY CORRECT

if changing the table top increases the life of the table then it is to be capitalised.

any how it is a vey subjective matter , no hard & fast rule. so the treatment depends upon the management

Hi,

Its should be Capitalized as it increases the life of Asset & we will get benefit in next few years.

Regards

Harpreet Singh

1) lets make capiltalization of table tops.............. 

these table tops are not annexures to old tables, but old table tops are removed.

old table tops have certain value, may be notional, have we made them exit from our capital assets by way of sale or destruction or disposal?

the wdv cost of tables consist cost of table tops also which are going to be replaced and we have to reduce our wdv value with proportionate ratio.

unless we remoe the old table tops the new table tops can not be fixed, so we have to dispose them 1st then fix the same, and to establish the same , we have to issue sale vouchers for old table tops.

if such vouchers are present , indicating removal of certain amount relating  to removal of table tops, then certainly table tops can be capitalized.

2) if the removal of table tops are not confirmed in accounts , i.e rejection of table tops and sale / disposal at certain value ( which may make profit or loss in P/L depending on wdv cost of table tops), wuch replacement would be treated as renovation of tables, and the related expenditure will reflect under furniture repair and maintanance.

3) if the table tops are used above old table tops, without removing the old one, then also it would be capitalized, 

in a nutshell when we replace any part, then the old part is to be disposed by way of sale or otherwise, and then only new part can be taken in capital asset, as the whole capital asset is unchanged before and after the renovation.

views of other members are welcome.

obviously changing the top will increase the life and usefulness of the table. Will be charged as capital exp, means addition to assets' block

An Expenditure is to be Capitalised  if:

it is inncurred for the purpose of :

a) acquiring, extending or improving asset of a permenant nature

b) incresing the earning capacity of the business.

the point of difference here of- repair for  'improvement' or 'maintenance'

since the repair of table is for its maintenance.. it should not be capitalised..

on the other hand if it had been for improvement it should have been capitalised