Meaning
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 February 2012
what is capitilise of assest ?
17 February 2012
Capitalisation is the addition to the balance sheet as an asset of an amount that could otherwise have been treated as an expense.
For example, if a part of R & D expenditure is capitalised it will be added to the balance sheet as an intangible asset, and then amortised. If it is not capitalised, then it will simply be shown as a cost on the P & L.
Capitalisation is a result of the accrual principle. Although accounting standards contain more detailed rules, the fundamental purpose of capitalisation is to allow the accrual of expenses in the current period to sales in future periods.
Expenses that may be capitalised include:
* development expenditure,
* computer software (but not all internal development costs)
* other intangible assets provided future benefits are probable and costs are reliably measurable,
* interest paid while while acquiring an asset or preparing it for use.
Investors may sometimes find it useful to adjust the accounts by capitalising expenses that a company does not capitalise. For example, capitalising all R & D.
For example, if a part of R & D expenditure is capitalised it will be added to the balance sheet as an intangible asset, and then amortised. If it is not capitalised, then it will simply be shown as a cost on the P & L.
Capitalisation is a result of the accrual principle. Although accounting standards contain more detailed rules, the fundamental purpose of capitalisation is to allow the accrual of expenses in the current period to sales in future periods.
Expenses that may be capitalised include:
* development expenditure,
* computer software (but not all internal development costs)
* other intangible assets provided future benefits are probable and costs are reliably measurable,
* interest paid while while acquiring an asset or preparing it for use.
Investors may sometimes find it useful to adjust the accounts by capitalising expenses that a company does not capitalise. For example, capitalising all R & D.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
