Revenue or capital expenditure

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hitesh sharma (Querist)
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24 April 2009 cost of key board or other accessery of computer purchased will be capitalised or charged in P\L Account tell me in full detail

CA Devin

CA Devin (Expert)
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24 April 2009 Any asset expected to be used in business for more than 12 months should be capitalised. However, if the value of asset is less than Rs. 5,000 than it can be charged to revenue at the descrition of management.

hitesh sharma

hitesh sharma (Querist)
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25 April 2009 if computer parts purchased for many computers suppose 50 keybords then cost will be more than Rs 5000 but individual asset value may be less than Rs 5000 then how will its nature be defined?

taxindiaconnect

taxindiaconnect (Expert)
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27 April 2009 As per AS - 10 on fixed assets accounting any cost which is incurred to bring assets to a working conditions, should form part of the plant and machinery . Accordingly the key boards purchased along with computers are needed to bring then to working conditions need to be capitalised. If the cost on purchase of assets is incurred to enable fixed assets to work effectively, the cost needs to be charged to P & L Account. In your query it seems that the key boards are purchased fro replacement of existing key boards, need to be charged off to P & L Account. Had the cost of purchased of each individual assets been > 5K it need to be charged off say cost of 50 CPU's . This applies the Income tax act depreciation as well.

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