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Query for audit

AMAN TRIVEDI (ARTICLE ) (24 Points)

01 September 2017

A trading Company Has purchased Moulds to print Logos of their trade mark. Mould costed them one lakh and printing cost is between 5-8k for each print. I have advised them to capitalise the moulds and put the printing cost into the cost of sales. Please comment was this a correct advice ?

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4 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 01 September 2017

You are correct for the capitalize of printing mould.
But, Logo printing is not in sale. It's their advertising purpose. So, it's not add in sale cost. It's only their expenditure....

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AMAN TRIVEDI (ARTICLE ) (24 Points)
Replied 01 September 2017

Okay first they have paid advance to the party for printing for Rs 70k and they want to amortise the expense through cost of sales. As they think, this is paid for the particular product , as it contain product info and company name and want to increase the inventory. I think you are right , it should go into advt but, i need a clear treatment. so i should be able to tell then what is wrong in their thinking can you explain please?

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 01 September 2017

You ll reply to the client. Don't put logo in the product. Then you don't want add the amount in selling cost...!

Registerexperts.com (company registeration) (34 Points)
Replied 11 October 2017

You are correct for the capitalize of printing mould. But, Logo printing is not in sale. It's their advertising purpose. So, it's not add in sale cost. It's only their expenditure....