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Fixed Asset

h.balaji (studying) (58 Points)

21 December 2007

I am paying rent for my factory. and i do some alterations in the factory which costs me around 15000. wil it be treated as a capital item?

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3 Replies

Sathish Karunakaran (ACA) (614 Points)
Replied 21 December 2007

Any expenditure on material alterations of factory having impact in the form of - increasing production capacity by increasing floor space - increasing life of factory building - increasing revenue generating capacity in any mode can only be capitalised to the building costs. Others ought to be expensed.

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Any such amt. is treated as capital if it has an effect which extends to more than one yr. and that which increases the production capacity of the asset.