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Query relating to as 10

kanika Seth (Student) (269 Points)

27 February 2016

should we deduct cash discount also while finding the cost of machine to be capitalized? please give ans with reason for clarity.

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Madhur Asati (25 Points)
Replied 27 February 2016

dear kanika,

Cash discount is not deducted because as per AS-10,

"The cost of an item of fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Examples of directly attributable costs are: (i) site preparation; (ii) initial delivery and handling costs; (iii) installation cost, such as special foundations for plant; and (iv) professional fees, for example fees of architects and engineers."

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