Shoud be assets or expenses

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This query is : Resolved

Manish (Querist)

22 May 2008 At prest we book a purchase value of new mobile as expenses instead of assets booking.

Now our internal auditor recongnized as assets & statutory as expenses , b'cause statutory argue that nowadays mobile is a very changeble instrument. So don't provide it as assets.

Now tell us should we continue with expense or go with internal auditor as assets

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

22 May 2008 Apart from materiality, the distinction between capital or revenue is on the basis of two important criterion.

1)An asset must come into existance
2)The asset must be of enduring nature, meaning, it should last longer than one year.

R.V.RAO

R.V.RAO (Expert)

22 May 2008 ANY CAPITAL EXP.TO QUALIFY AS AN ASSET, MUST ALSO INCREASE REVENUE EARNING CAPACITY .
AS ALL ASSETS LIKE FURNITURE HAVE NO EARNING CAPACITY ATLEAST AN ASSET SHOULD BE OF LASTING LONGER - DURATION -IF SET CAN BE SUBJECTIVE -

What is an Asset?
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
www.gehomenow.com

SO THESE ARGUMENTS CAN GO ON AND ON....
IF MANAGEMENT TAKES A STAND AND TREAT MOBILE AS AN ASSET OR AS EXPENSE ,IT IS FINAL AND IT IS FINE.NO ARGUMENT ON THAT.
COMING TO INDUSTRY PRACTICE, CORPORATES THESE DAYS WRITE OFF MOBILES AS EXP.DUE TO FREQUENT TECHNOLOGY CHANGES AND EXISTNG MOBILE MODELS GET REDUNDANT IN NO TIME.
R.V.RAO

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