Capitalisation

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Paresh Vaidya (Querist)

17 December 2007 Please tell me about Capitalisation, Transfer to respected Account & Also Send me the simple method for Calculation of Deprication & Tips for Finalisation of Balancesheet

Thanking you,
Regards
Paresh Vaidya

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

18 December 2007 Any expenditure incurred to bring into existence a fixed asset is capitalisation. All expenditure incurred in connection with such bringing into expenditure are initially taken to capital expenditure in progress and on capitalisation transferred to the respective fixed asset account. There is no complexity involved in calculation of depreciation,especially if Straight line method. What exactly is your problem in calculation?

SHAMIM HAMEED

SHAMIM HAMEED (Expert)

28 December 2007 Capitalizing an expense means to treat that expense as capital expenditure. That is it should not be debited to P & L but added with asset if asset related or to be shown in Balance Sheet. Any expenditure which gives you a long term banefit or increases efficiency of an asset or incurred prior to putting an asset to use or incurred prior to commencement of business is capital expense.
Depn under SLM is calculated as
Original (Cost - Scrap Value)/Useful life.

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