Asset capitalisation

durgesh jaiswal (Chartered accountant) (27 Points)

29 May 2013  

Case : X Ltd is Indian company having a foreign client Y Plc.  For purpose of certain project , Y Plc instructed X Ltd to purchase certain asset in India and entire cost is reimbursed to X ltd . Assets are deployed in X ltd office but entire control over rest on Y ltd. X ltd is only resposible for maintenance & safe guard of asset .

Question : Will this asset be capitalised in books of indian company X Ltd as entire cost of asset is reimbursed by Y PLC ??if yes, what will be accounting treatment for reimbursed amount ??