Capitalisation of Expenditure
This query is : Open
22 January 2009
X ltd having Computer Worth rs. 25000 in balance sheet during the year x ltd paid rs. 6900 for purchase of software, Rs. 2500 for the maintainance of website, Rs. 3690 purchase of ram, so shall X ltd have to capitalise Rs. 6900 if yes then what is the rate of depreciation in companies act and in cometax act.
22 January 2009
1) How do we close books ?
2) what do u mean by Accumilated Deprecion
2) what do u mean by Accumilated Deprecion
22 January 2009
By passing theclosing entries and adjusted entries you can close your books of accounts.
22 January 2009
As regards software, capitalization is stillan subjective matter ecen in practical life...
Many capitalize it & many write it off.
Fact is that U never purchase a software. U just purchase rights / license...
It depends on nature of software.
It its totally new software & needed to run computer, then it will be capitalised with computer & if seperately purchased (as in ur case), then it will be capitalised (depending on nature of software) & it will be armotized over useful life. AS 26 says 3-5years are sufficient...
But softwares like SAP ERP can be armotized over many years as cost runs into crores.
Many capitalize it & many write it off.
Fact is that U never purchase a software. U just purchase rights / license...
It depends on nature of software.
It its totally new software & needed to run computer, then it will be capitalised with computer & if seperately purchased (as in ur case), then it will be capitalised (depending on nature of software) & it will be armotized over useful life. AS 26 says 3-5years are sufficient...
But softwares like SAP ERP can be armotized over many years as cost runs into crores.
22 January 2009
Accumlated depreciation is the total depreciation charged from inception
24 January 2009
Dear Ajay,
As per the given facts,
As per AS- 10, the expenditure which increases the efficiency of the assets as compared to inital efficiency will be capialised.
As per Indian GAAP. If the software is such that which are required to run a computer, then it will be capitalised as Computer.
if a separate software, then it will be dealt by AS- 26.
AS per companies act, the assets which are of Rs. 5000 or less shall not be capitalised.
amarpal@icai.org
As per the given facts,
As per AS- 10, the expenditure which increases the efficiency of the assets as compared to inital efficiency will be capialised.
As per Indian GAAP. If the software is such that which are required to run a computer, then it will be capitalised as Computer.
if a separate software, then it will be dealt by AS- 26.
AS per companies act, the assets which are of Rs. 5000 or less shall not be capitalised.
amarpal@icai.org
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITR 2 Short Term gain & Long term gain
- Reporting Income under Section 44ADA
- Itr 1 processing
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- Share accounting-->fifo - capital gain - period as per fifo?
- ITR selection for salaries and capital gain less than L
- Short Term Capital gain on shares bought and sold after 2018 onwards
- ITR 1: Details for showing Exempt Income
- ITR returnFY25-26
- ITR validation error - Balance sheet is not filled
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
