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Entry for purchase

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(Querist)
13 July 2013 If a company purchases mobile the value of which is Less than Rs. 5000/- should it be treated as capital asset or revenue expenditure

i.e. how it should be accounted for
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CA SURENDRA KUMAR RAKHECHA

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CA SURENDRA KUMAR RAKHECHA (Expert)
14 July 2013 From the facts given; you can treat it as a revenue expenditure because the life of mobile is generally not more than 1-2 years.
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Ganeshbabu K

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Ganeshbabu K (Expert)
14 July 2013 Yes..it is not revenue expenditure.

1)Purchase of mobile is fixed asset so purchase of mobile should be capitalized..

2)As per companies act rate of depreciation on Assets Whose actual cost does not exceed Rs.5000 shall be 100%

3)So by doing as above in Fixed Asset register it will shows as Addition of fixed asset and as the actual cost was less than Rs.5000 you have depreciated at rate of 100% so value of asset at the end of year was Rs.zero

Thanks & regards
Ganesh babu k
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CS,CA F,Numrologi TusharSampat

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CS,CA F,Numrologi TusharSampat (Expert)
14 July 2013 MOBILE SHOULD BE FIRST DISCLOSED AS FIXED ASSET AND THE IT SHOULD BE WRITEN OFF 100% AT THE YEAR END.
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