E pass token revenue item or asset?

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This discussion explores the accounting treatment for an e-pass token purchased for Rs. 500. While the token itself might have a benefit exceeding 12 months, the associated Digital Signature Certificate (DSC) has a one-year validity and is expensed. The consensus leans towards expensing the token, especially if it falls below a company's capitalisation threshold for fixed assets. Businesses are advised to establish a clear policy for capitalising items based on cost.

k chakraborty

k chakraborty (Querist)

08 January 2024 Sir,
we purchase an e pass token ( usb token for DSC- computer acc.) recently, for Rs. 500/- . Given the fact that benefit derived from the item would be more than 12 months, i am wondering whether i should capitalise the item. Note the actual DSC ( the item that is downloaded in the usb token- shown differently in invoice) has one year validity and hence will be shown as expense

RAJA P M

RAJA P M (Expert)

09 January 2024 It's a expense. So, You can account in PandL.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

14 January 2024 Businesses should adopt a capitalization policy establishing a INR amount threshold. Fixed assets that cost less than the threshold amount should be expensed.

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