Can Cyberoam be capitalized ? We paid Rs.36,000/- towards cyberoam.
CMA MUNIKOTI CHANDRA SEKHAR (MANAGER) (92 Points)
24 December 2013Can Cyberoam be capitalized ? We paid Rs.36,000/- towards cyberoam.
Siddharth
(Article Assistant)
(111 Points)
Replied 24 December 2013
you have paid the amt. of Rs. 36000/- for network security setup. In this case, this expense will be considered as deferred revenue expenditure because it gives you the benefit over a period of time it saves the data from viruses, saves our valuable business from the threats etc.
Siddharth
(Article Assistant)
(111 Points)
Replied 24 December 2013
To support my answer
As per Para 6.1 of AS 10 "Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business"
So, the network security payment made to cyberoam will be treated as capital expenditure because intention of being used for the purpose of providing service.
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