Fixed assets

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Sanjib Mukherjee (Querist)

16 September 2012 Dear Sir,
How to treat fixed assets. How to select whether it is fixed assets? Suppose if we purchase machinery parts, then can we treat it as a fixed assets? Pls reply

CA VIKASH AGARWAL

CA VIKASH AGARWAL (Expert)

16 September 2012 if parts enhance the current capacity of machine than it is treated as fixed assets otherwise repair n maintenance

Sanjib Mukherjee

Sanjib Mukherjee (Querist)

16 September 2012 if such parts does not enhance the machine capacity but if it a vital parts without this parts machine is not able to working

Gurcharan

Gurcharan (Expert)

17 September 2012 You can record a cost as a fixed asset when it has a future economic benefit that extends beyond one year from the date of acquisition e.g. a car, a computer, a plant /machinery, building, furniture etc. A part of the machinery which is meant for the repairs purposes wihout changing its economic benefits should be treated as inventory of spares and expensed as maintenance items when it is consumded. Depending the materiality of the item, it may be expensed on purchase itself.

Trust this helps. Happy to take further queries if required.

regards

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