Capitalisation or revenue exp
This query is : Resolved
20 September 2013
Our Company paid, Rs.2.83 crores to state power distribution corporation for supply, errection, service line for a sub station in our company premises for 2400kva power supply, initially we have old substaion having 1200kva capacity which was totally dismantelled and new one was errected.
Now my doubt is, can I treat such expense as Revenue as I am not having any control over such sub station and our payment is for getting additional power for our production and not to build an asset in the form of sub station.
even though we are getting future benefits from such sub station, is it correct to treat it as Revenue expenses
Now my doubt is, can I treat such expense as Revenue as I am not having any control over such sub station and our payment is for getting additional power for our production and not to build an asset in the form of sub station.
even though we are getting future benefits from such sub station, is it correct to treat it as Revenue expenses
CA Parul Saxena
(Expert)
20 September 2013
Yes to be treated as revenue expenses....
21 September 2013
Thank u Parul for your reply, it would be more helpful to me if u justified my treatment with proper base.
CA Parul Saxena
(Expert)
21 September 2013
This payment is nothing just an expenditure incurred for getting more electricity...so this must be booked as revenue expenditure.wait for the other experts reply.
21 September 2013
me too have same opinion sir, thank u for ur kind response again
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