Can a company adopt a policy to write off all the fixed assets below 40000/- ? or whats the basis of fixing the materiality in writing off the Fixed assets and is it covered by any section under Companies Act
07 May 2008
In schedule VI, no amount limit has been specified for assets to be treated as fixed assets. It is upto the company to decide on this matter, but that should be in line with average size of its' assets. In other words, if Rs. 40,000/- are too small when compared with average asset size, it may write off the same.
But in my opinion, besides checking for individual asset value, the total amount to be written off is also to be taken care off. If it represents substantial part of total assets, it will not be a good practice to write off the whole amount.
CAclubindia
