Accounting

Servicing of Machine is revenue item and Dr to P&L

Spares if purchased and used on regular basis then Dr to P&L else capitalise

this is not job work.

the whole amount is capitalise

and debited to machinery a/c

because this expenditure is in capital nature

and will be capitalised

only depreciation can be claimed on the whole amount at the end of the year

As Per my view

Spares which require to Capitalised. (It is not as a repair)

Servicing is p &l item

Probably the repairs of the said welding machine would be just to keep the machinery in proper working condition and there is no incresse in the performance or increase in the useful life of the welding machine.

Whenever any spares are replaced to any machinery the test is whether there is any increase in future economic benefits that is exepected to flow to the entity or there is significant improvement in the operations from previously assessed or there is a significant reduction in operating costs because of such replacement. If the answer is affirmative to above then the items are capitalised else they are charged off.

Regards

THERE IS NO NEED OF CAPITALISED BECAUSE THIS IS A REVENUE EXPENDITURE, BUT THIS IS ALSO NOT A JOB WORK, BECAUSE WE CALL JOB WORK THAT WHEN THE THE COMPANY SUPPLY MATERIAL,BUT IN THIS CASE COMPANY NOT SUPPLY MATERIAL SO THAT IS NOT A JOB WORK ALSO, THIS IS A REVENUE EXPENDITURE & DEBITED IT TO PROFIT & LOSS ACCOUNT AS REPAIR OF MACHINERY.

Purchase of spare can be capitalised if it was required to keep the machine in working condition/if it increases the future economic benefit /and also the value of the machinery.

Servicing needs to be charged to P&L account

Hii Maansa as per my openion first i will say,,, this is surely not a job work. now another aspect  wt to do wth servicing charges...

as per my openion it hould be debited to P&L A/C

becuse servicing seems  a routine servicing jus to keep machine in proper working condition,,,, as u said quotaion is also mentioned this fact... hence it is of revenue nature and should not be capitalized....

thanX

ALL D BEST