Parts of machinery purchased

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2011
If the main parts for eg. nuts/ mainlead screw of a machine are purchased, then whether they should be dr. to consumables or under the resp. machine head.?

Plz reply.

Mandar

Mandar (Expert)

05 May 2011 Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life that extends beyond the taxable year. Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. In accounting, a capital expenditure is added to an asset account ("capitalized"), thus increasing the asset's basis (the cost or value of an asset as adjusted for tax purposes).
You have mentioned nuts/ mainlead screw etc. which can be charged off to the revenue exp & there is no need to capitalize.

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