First Insurance on purchase of a new car. Whether to be capitalized?
Ans. No, it will be charged to the expenses account as it is not the primary expenses part of the new car and after one year it will be expired, hence in my opinion it shpuld nopt be captalised.
2. Software; Whether to be capitalized as Compter?
Ans. Yes, it should be capitalised, as withouit software the computer will loose its identity and could not be used for work.
3. What will be the rate of depreciation on software?
Ans. The software should be amortised over the period of its licence validity.
4. Software like the one TDS Software; Whether to be capitalized?
Ans. No, it need not to be, but if we purchase software once and it requires only updation in the existing software, then we can capitalised it and updated charges should be charged to expenses account.
5. Fire Extinguishers; Whether may be written off @ 100%?
Ans. It dependes on its value and its useful life. if the useful life will over within one year and could not be used by refilling it or the value is less then 5000/- then we can write off it @ 100/% else it should be capitalised and charge depreciation at the applicable rates.
6. A complete asset costing Rs.15000 when purchased in parts(components) and assembled and house costs Rs.12000/- with none of the component costing in excess of Rs 5000. Whether the whole of the asset may be w.off as the individual cost of all components is less than Rs.5000/-?
Ans. No, as asset came into existence only after assembeling the different parts. When different parts below value of Rs.5000/- assembeled and generate new asset then the value of new generated asset will be the total cumulative cost of every part used for its. Hence it should not be writeoff @ 100%.
Software developed in house. How the same should be capitalized? What will be the cost of such a software? How the auditor will verify its cost for the purpose of his Audit
under the Companies Act and 44AB of Income Tax Act
Ans. The cost manpower, materials and components involved in developement of the software, will be the cost of the software and the Assignment in payroll or Job Card or in any internal reports will be the support the cost.
8. Fee paid for seeking extension of the construction time to a Development Authority by a plot owner before the construction date. Whether to be capitalized?
Ans. Yes it needs to be capitalised because without it the civil structure could be come in existence.
9. A Company has acquired 20 plastic Moulded chairs for Rs. 8000/- i.e., Rs 400 per chair. Whether all the chairs may be w.off
Ans. Yes, it can be writeoff @ 100%
in view of the provisions that the asset upto a cost of Rs 5000 may be w.off @ 100%?