Company issued Mobile Phone

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A US-based company's policy is to expense all company-purchased mobile phones. However, the user is seeking clarification on whether this approach is compliant in India, or if Indian Companies & IT Act provisions necessitate capitalising such assets, especially those costing around ₹30,000 and above. International Financial Reporting Standards (IFRS) suggest capitalising and depreciating the asset over its economic life, typically three years.

Sumit

Sumit (Querist)

18 February 2020 Hi, A US based company has a policy saying "All company purchased mobile phone should be expensed off (regardless of value". We, here in India, can follow the same or we need to treat it differently due to some provision of Companies & IT act.

Kindly provide guidelines in this regard, if possible/available.

Amol S Joglekar

Amol S Joglekar (Expert)

20 February 2020 you can capitalise if you want

Sumit

Sumit (Querist)

24 February 2020 Thanks Amol Sir, but i want to know, can we here in India also expensed off the same based on companies policy, or we need to capitalize the same due to some IT or companies act guidelines.

Amol S Joglekar

Amol S Joglekar (Expert)

24 February 2020 what is the cost of a mobile?

Sumit

Sumit (Querist)

25 February 2020 Around 30000 and above

Amol S Joglekar

Amol S Joglekar (Expert)

25 February 2020 using IFRS, it will be advisable to capitalise. The depreciation should be charged as (initial cost - salvage value) divided by economic life of mobile handset. ( 3 years is normally suggested as the economic life of mobile handset)

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