Parts purchase

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CA. Mala Rohara

CA. Mala Rohara (Querist)
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20 April 2009 If Co. purchase parts for plant & Machinery, then what will be its accounting treatmnet?

Chandresh Pitroda

Chandresh Pitroda (Expert)
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20 April 2009 Fixed Assets A/c. Dr.
To Creditors A/c.
(With Machinery purhcase)

Repairs & Maaintenace A/c. Dr.
To Creditors
(For further purchase of parts)

Jaina Shah

Jaina Shah (Expert)
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20 April 2009 If the parts of the machine are purchased before the machinery is installed then it would be treated as Capital WIP and if the parts are purchased subsequent to the purchase of the machinery for the purpose of the repairs and maintenance then the effect should be given accordingly