19 May 2012
Historic Cost Concept says that 'whenever any asset is purchased, it should be recorded at historic cost'. Historic Cost means just acquisition price and not installation charges. Then why do we include installation charges while recording asset. Isn't it violation of Historic Cost Concept?
22 May 2012
Dear Harsh Your Query is right but friend as per
AS 10 Accounting for Fixed Assets Components of Cost
The cost of an item of fixed asset comprisesits purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition foritsintended use; any trade discounts and rebates are deducted in arriving at the purchase price. Examples of directly attributable costs are: (i) site preparation; (ii) initial delivery and handling costs; (iii) installation cost, such as special foundations for plant; and (iv) professional fees, for example fees of architects and engineers. The cost of a fixed asset may undergo changes subsequent to its acquisition or construction on account of exchange fluctuations, price adjustments, changes in duties or similar factors.
that is why installation charges include in historical cost .
Regards VISHWASH AGARWAL M N - 07666515328 Mail - vishwashagarwal@ymail.com
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