CA CS Amit Borade (Chief Accountant) (2828 Points)
11 April 2010
Hi Friends
A Indian Company which is 100 % subsidiary of Foreign Company (FC=Manufacturer of Lab Equipments & Scientific Equipments), established in
There are some cases where Indian Sub.company receives Lab Equipments parts from Foreign Co, which assembled in
Currently Indian company is treating such Lab Equipments received as Fixed Asset & the same are capitalized as Lab Equipments.
My question is whether the company’s treatment is right???
Thnaks & Regards
Amit
CA Babit Khurana
(learning is my passion)
(338 Points)
Replied 11 April 2010
As Per AS 10 Accounting for fixed assets, Fixed assets is an assets which are held for the purpose of used in business and have no intention for resale. But in your case ultimate intention is sale of equipment. Then as on ligal ground as per AS-10 nsame shall not be treated as Fixed assets.
Pl clerify if i am wrong
CA Sultan.........never quits
(Financial Controller)
(511 Points)
Replied 11 April 2010
Dear Amitab,
Babit Khurana is right. When a asset is used for the purpose of use in the businees then it can be classified as fixed assets. In this case the LE's are assembled and kept for DEMO. The intenetion of the compnay is to show the LE 's to its customer to sell the products. This is nothing but stock.
Hence to be classified as stock.
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 11 April 2010
yes, all of above are correct......... treat it as Stock............ the final intention is re-sale, not using it in the business for business operations...........
CAclubindia
