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Purchasing of mobile sim card and mobile set

31 January 2016

Hello everyone

I have a question regarding accounting matters.If an office purchases mobile sim card and mobile set for company's head office's staff then which head of accounts should that cost be put in? I guess they should be put in Office maintenance or telecomunication expense.Am i right?

Thanks in advance

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8 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 01 February 2016

If the cost is below 5000 you can do so. Otherwise capitalised as fixed asset and claim depreciation

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Anurag Singhal (Manager) (22 Points)
Replied 01 February 2016

it will got under notes to other expenses as

:--postage,telegram & telephone expenses

A.shanmuga sundaram (Deputy manager) (73 Points)
Replied 01 February 2016

As per companies Act,2013, schedule II, the act was silent in Cost of asset is below or equal to Rs.5000/-

As per my interpretation, it should considered as Fixed asset,

VISHAL GARG (Learning from life) (106 Points)
Replied 02 February 2016

There is no concept of 5000 in accounts.its a materiality concept which is generally used by company as a policy.therefore they use to write in notes that capitalisation below 5000 is to be expensed off.In such a case u have to capitalise the mobile with sim as per AS 10.in general also check for its economical benefit to company not its amount.

ravinder rohilla (LL.B,CA(final)) (29 Points)
Replied 02 February 2016

You have to capitalise all amount as according to AS-10

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Srinivas Ch (Sr.Accountant) (365 Points)
Replied 03 February 2016

if cost of value high comes under fixed tengible asset for both SIM and mobile with purchase price. the expenditure incurred on monthly telephone bill comes under Communicaton charges under Expenses

faizanca (AUDIT MANAGER) (28 Points)
Replied 03 February 2016

It should be capitalised as per AS 10. If the cost is less than Rs. 5000 claim 100% depreciation in the year of purchase. Otherwise depreciation should be claimed of normal rate i . e. 15 %.

AKASH KAILASHJI AGRAWAL (Student CA Final ) (27 Points)
Replied 03 February 2016

Companies Act 2013 does not specify any limit for Capitalization Or Expense. So i think, its depend upon management judgement whether to capitalize or not. If amount is not material as compare to turnover of company then expense otherwise Capitalize.