Capitalization of capital goods
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 January 2012
please provide defination of capitalization.
and give an example of capitalization of capital goods.
Thanking you,
and give an example of capitalization of capital goods.
Thanking you,
12 May 2012
Capitalization means treating the expenditure as an ASSET and not as a revenue expense.
An expenditure shall be treated as an ASSET if such expenditure is expected to provide benefits over future periods.
For eg. plant & machinery, vehicles, furniture.
The amount to be capitalized shall be the amount paid for acquiring the asset and the costs incurred to bring the asset to its working condition.
Entry:
Fixed Assets A/c Dr
To Bank A/c
An expenditure shall be treated as an ASSET if such expenditure is expected to provide benefits over future periods.
For eg. plant & machinery, vehicles, furniture.
The amount to be capitalized shall be the amount paid for acquiring the asset and the costs incurred to bring the asset to its working condition.
Entry:
Fixed Assets A/c Dr
To Bank A/c
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