We purchase a datacard for office use. The cost of datacard is 2500/-. This purchase is to be treated as Fixed asset or Expenses.
17 Replies
CA GIRISH
(Chartered Accountant)
(1796 Points)
Replied 12 November 2009
I guess it has to treated as an expense .. As it is gonna be used in this year only...it should be charged to P&L.....data card doesnt last for more than a year ....
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 12 November 2009
I think its the usage, which determines an item to be fixed asset or the revenue expense...
I think, in ur case, its a FIXED ASSET, as its held for the business purpose...
Nywz, let other members too comment on the same...
Sushil
(CA Final Student)
(2571 Points)
Replied 12 November 2009
Its a capital expenditure and should be depreciated 100% during the year.
CA Parth Shah
(Chartered Accountant)
(369 Points)
Replied 12 November 2009
data card is nothing but a storage device which can be used for a long period of time.
So it is Capital Expenditure.
bt generally luking to the amount,we dnt capitalize sch rs.2500.Even if u create an Asset, there would be nothing wrong.
CA Atul Gupta
(Senior accounts officer)
(29 Points)
Replied 12 November 2009
data card is not required to be capitalised as it does nt come in the defintion of fixed assets ( computer) it has to charged as expense
geethareddy
(pursuing ca final new course)
(39 Points)
Replied 12 November 2009
It will come under the definition of Fixed asset as its intended use spread over a number of years and it should be capitalised
Kiran
(CA CS n given CWA fiinal)
(155 Points)
Replied 13 November 2009
Accounting assumption of substance of over form.even though we buy data card,calculator etc etc,they r all negligible to the capex incurred in our business.i guess it depends on a org 2 org basis
Kiran
(CA CS n given CWA fiinal)
(155 Points)
Replied 13 November 2009
correction substance over form
Vishnu Aggarwal
(Account officer )
(42 Points)
Replied 13 November 2009
We have alredey fire alarm systems Rs.80 Lac.its is 10 year old.Know we going to update in this of cost of 15 Lac.(some change in address panel & smoke deducter).
My quation is this amount 15 lac charges in revenue exp or capital exp And why?
Thanks
Vishnu Aggarwal
NAMAN SINGHAL
(CA final , CS final)
(228 Points)
Replied 13 November 2009
| Originally posted by :Vishnu Aggarwal | ||
| " | We have alredey fire alarm systems Rs.80 Lac.its is 10 year old.Know we going to update in this of cost of 15 Lac.(some change in address panel & smoke deducter). My quation is this amount 15 lac charges in revenue exp or capital exp And why? Thanks Vishnu Aggarwal it is simply a repair & maintenance .......so it shud b chargd to P&l not capitalised. look their is a simple logic always compare the repairable asset after repair with the original one. if their is increase in efficiency of asset it will be capitalised otherwise it will treated as revenue. |
" |
th
Vishnu Aggarwal
(Account officer )
(42 Points)
Replied 13 November 2009
We have alredey fire alarm systems Rs.80 Lac.its is 10 year old.Know we going to update in this of cost of 15 Lac.(some change in address panel & smoke deducter).
My quation is this amount 15 lac charges in revenue exp or capital exp And why?
Thanks
Vishnu Aggarwal
it is simply a repair & maintenance .......so it shud b chargd to P&l not capitalised. look their is a simple logic always compare the repairable asset after repair with the original one. if their is increase in efficiency of asset it will be capitalised otherwise it will treated as revenue.
thanks sir...
But its total Use less last 4-5 year and should be increes in efficeency and proper working after finished work.know we can treat as a capitalised it?
Vishnu
NAMAN SINGHAL
(CA final , CS final)
(228 Points)
Replied 13 November 2009
| Originally posted by :Vishnu Aggarwal | ||
| " |
We have alredey fire alarm systems Rs.80 Lac.its is 10 year old.Know we going to update in this of cost of 15 Lac.(some change in address panel & smoke deducter).
see this example: mr A purchased a m/c for rs 200000 in 2005. he can produce 10000 units by using this machine. also it has a useful lyf for 5 years. In 2007 a part of machinery needs to be repaired. repair expenses comes to 50000. after repair m/c produces 10000 units only same as earlier. now see these repair expenses will be treated as of revenue nature because it niether lead to increase in production as compared to m/c when it was purchased. so there is no increase in efficiency. further if due to repair the production is more than 10000 units den it should be capitalised. similarly if the fire alarms are serving the purpose same as ven they were purchased then it shoudn't be capitalised. hope u got it vishnu |
" |
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