Capitalization of specific machine

No,FG and SFG utilised during the trial run are not capitalised,rather the sales realisations of the produce is deducted from the trial run expenses. Rectify me if I m wrong

yes it will be capitalised

any expense incurred on trial run of the machinery should be capitalized                          

As per provisions of AS 10 'Accounting for Fixed Assets',

expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost.

However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ...  

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Anit

Originally posted by : Anit
	As per provisions of AS 10 'Accounting for Fixed Assets', expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost. However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ...     ----------------------- Anit

Good Explaination ...

agree with Mr. Anit

Originally posted by : future ca
	any expense incurred on trial run of the machinery should be capitalized

 Yes i too feel the same... it should be capitalised.... even though it is not a new project....

yes it is very clear with AS 10... it will be capitalized..

Expenses on trial run will be capitalised..

Originally posted by : vandana
	yes it is very clear with AS 10... it will be capitalized..

AGREED.

Sir,

AS - 10 is very clear on the query you asked.....
 

If the trial run is successfull one then it should be capitalised otherwise it will be charge to P & L A/C.

As per AS-10 it should be capitalised