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Purchase of Safety Equipment

ExM ExM (8 Points)

05 June 2023

Hi,

under which head does 'Purchase of Safety Equipment for Factory workers' go.

Is it Staff welfare expenses or Factory Expense ?

Thanks in Advance.

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3 Replies

CA Mohd Firoz Khan (Chartered Accountant) (108 Points)
Replied 05 June 2023

Query : Safety Equipment for Factory workers, whether it is staff welfare expenses or Factory Expense
Ans : If Safety Equipment life is more than 1 year, we should capitalized it otherwise it should transfer under Staff welfare Expenses

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Yasaswi Gomes new (Finance ) (4514 Points)
Replied 05 June 2023

I guess there is no other way. If the safety equipment is needed it is capitalized. for example, fire extinguishers are refilled 5-6 years and form a part of PPE like CC cams if it is necessary. Band-Aids, medicines expire so they are (for the sake of a discussion) direct costs because they can be physically traced to the cost units aka factory 1, 2 etc. But are expensed like operating costs whilst they are direct costs as well. Lets see what's happens now. Well let me be frank, its an indirect cost, like medicines and first aid, but cost centers dont have direct or indirect cost allocations but ABC does. No abc doesnt as well, cause abc allocates indirect costs to direct costs on a cost unit. Sorry mi mistake.