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Valuation of loose tools & spare parts

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Querist : Anonymous

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Querist : Anonymous (Querist)
20 May 2010 How the valuation of loose tools as well as spare parts of machinery can be done?
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
20 May 2010 Spares and tools which is not part of any particular Fixed assets, you can value as Inventory as per AS-2 and charge off in P&L a/c based on consumption
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DEEPIKA GOEL

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DEEPIKA GOEL (Expert)
20 May 2010 If the loose tools and spares is of regular use i.e. the spares are required on frequent basis just like moulds and dies which become obsolete or broke down after using sometime, it should be considered as inventory and valued at cost or market value whichever is lower and charge off it on the basis of consumption.

If these are not of regular use or use at unfrequent basis, it should be capitalised and treated as part of fixed assets. And accordingly it should be depreciated.
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