As 10
This query is : Resolved
Abhishek Kumar Singh
(Querist)
26 February 2012
A Machinery cost 10 lakh was purchased few years ago and it has installed capacity of 50000 units annualy. But it normally produces 46000 units a year. During last year the co. incur expenditure of Rs.200000 and it produces 48000 units . State whether this amt. be capitalised or charged to P/L account.
CA. RAVIKUMAR
(Expert)
26 February 2012
It is to be capitalized because it is increases the capacity of the machine.
Guest
Guest
(Expert)
27 February 2012
It increase the production capacity and as such it results in benefit of enduring nature, the expenditure needs to be capitalised.
04 April 2012
No it is to be treated as the revenue expenditure as no new machinery or new technology has been added to the same machine and accordingly the amount spent on repairs is to be debited to P & L a/c
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