Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

mobile phones

Kishan (Specialist) (206 Points)

11 January 2010

Dear all ,

If mobile phones are purchased in bulk is it correct to treat it as a revenue item??

Reply
Follow
Share

13 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 11 January 2010

A. Mobile phone is an asset...., a depreciable fixed asset so how can u consider it as revenue expense on its purchase.... not to mention about the Quantity..

B. If a trader-in-mobiles purchases such bulk quantity, then its "PURCHASES".. not an expense

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Amir (Learner) (4016 Points)
Replied 11 January 2010

Deaer Kishan,

Dhiraj is rite that a mobile phone, being a fixed asset cannot be treated revenue item...

But remember CO LAW PROVIDES THAT FIXED ASSET WITH A VALUE NOT EXCEEDING Rs. 5000/- CAN BE CHARGED TO REVENUE IN THE YEAR OF IT'S ACQUISITION..

2 Like

nicky (Ca student) (112 Points)
Replied 12 January 2010

D н ! я σ √ is right............

PRAVEEN KUMAR PARWAL (CA PCC) (64 Points)
Replied 12 January 2010

If Mobile Use for Trading only than we can treat as revenue exp. Otherwise it is fixed assets.

NANDAKUMAR.B (ACCOUNTS MANAGER) (38 Points)
Replied 16 January 2010

But in actual practise, mobile phones purchased and given to staff members for their own use and as its location is not identifiable at any given point of time,how can we treat it as a fixed asset. As the model and technology become out dated,the concerned staff may replace it with updated one; either by himself or by the employer.

Upgrade to CAclubindia Pro. Subscribe Now!

(Guest)

Originally posted by : NANDAKUMAR.B
	But in actual practise, mobile phones purchased and given to staff members for their own use and as its location is not identifiable at any given point of time,how can we treat it as a fixed asset. As the model and technology become out dated,the concerned staff may replace it with updated one; either by himself or by the employer.

If mobile given to staff then how you can treat this as Fixed Assets. If the mobile is provided only for uses then it may be considered as Fixed Assets.

As concern to the principal for accounting of purchase of a mobile phone there are MATERILITY CONCEPT priciple is applicable. Charge all mobile phone as revenue if it costs < 5000. If you have purchased in bulk quantity then you can maintain seperate account for controlling.

Desperado (Cost And Management Accountant) (129 Points)
Replied 20 January 2010

Originally posted by : Kishan
	Dear all , If mobile phones are purchased in bulk is it correct to treat it as a revenue item??

Dear,

Irrespective of the responses of other members with regard to your query, i am of the view that Mobile phones in bulk must have been purchased for trading purpose and are intended to be resold, if this is the case then these must be treated as inventory rather than fixed assets. However, if these cell phones have been purchased for staff ( as some other members discussed), for their official use, then these should be treated as Fixed Assets, since these belongs to the company's property and company is allowed to claim depreciation on these mobile phones accordingly.

Let us know for what purpose these mobile phones have been purchased so then reply will be given accordingly.

Best Regards,

SHASHI SHANKAR SHARMA (Students) (47 Points)
Replied 11 June 2012

Hi,Brothers

i am now see a partenership firm as a auditor, here approx 60 mobiles purchased for distribution to employee.

then, Please tell me whole mobile cost Rs.1,10,000 trated as "ASSETS" OR " EXPENSE" in firm"s book.

Please revert as soon as possible.

Laukesh (RCM) (54 Points)
Replied 14 June 2012

Hi Shashi,

Mobile cost should be book under the head of fixed asset.Even you purchase less amount and not in bulk .

As per company act even asset value is less than 5000 it must be booked as fixed asset.

1 Like

SHASHI SHANKAR SHARMA (Students) (47 Points)
Replied 14 June 2012

Thanks Laukesh for ur best advice.

Upgrade to CAclubindia Pro. Subscribe Now!

SHASHI SHANKAR SHARMA (Students) (47 Points)
Replied 14 June 2012

Thanks Laukesh for ur best advice.

CA Kiran Kumar (Chartered Accountant) (34 Points)
Replied 02 July 2012

The average life span of a mobile is hardly 15 months to 24 years. At the rate of 15% depreciation we will have asset sitting in B/S having no value..