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Capital expenditure

This query is : Resolved 
 


Querist : Anonymous (Querist) 03 August 2012

Whether upgradation of Operating System to the latest version is Capital Expenditure & added to the existing value of Fixed Assets?

Further whether purchase of RAM for existing computers is Capital Expenditure?

Pl advice.


CA Guru M (Expert)
04 August 2012

As per Para 8 of AS 10, any expenditure which increase the performance of assets should be capitalized.

If upgradation of operating system increase performance & if it estimated to be used for more than a year then it can be capitalized.

However if the upgradation of operating system is routine for every year, then it should be treated as expenses.

Addition of RAM to be capitalized & depraciation to be calcualted based on no of useful life the system not RAM.




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