Fixed asset procure for replacement

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This query is : Resolved

Akash Unadkat (Querist)

23 November 2014 If i Buy a New Plant & Machinery / Furniture / Office Equipment, I Buy it NEW and pay amount of it.
But above New PROCUREMENT is actually REPLACEMENT of an OLD that Item.
[Suppose, IF i had 20 years old CNC Machine, now its Not Working and its life of working is over, and i Buy NEW in REPLACE of that]

now my QUESTION is What is Accounting Treatment ??
to Capitalise above [due to its life is more than one year] ???
or Book it as Expense [due to replacement of an old] ??
- AKASH UNADKAT

Amol S Joglekar

Amol S Joglekar (Expert)

23 November 2014 Capitalise it.
A block of asset concept has been introduced. This new machine will fall in the same block as that of the earlier one.

Rupesh Jain

Rupesh Jain (Expert)

25 November 2014 you have to capitalized the assets under the income tax act you have the block of this assets and add the value in this block when you sold the old assets then you have to deduct the value with the sales price

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