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Parts of machinery purchased

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Querist : Anonymous

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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.?

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Mandar

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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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