One of my known persons, who is proprietor of one construction company, recently asked me about an accounting of ‘Mobile’ purchase.
I told him to account the same under ‘Fixed Assets’ in an account named as ‘Mobiles A/c.’ Prior to this, he used to account it under ‘Postage & Telephone A/c.’
Later he asked me about the rectification required for this. I am doubtful about the same. In my opinion, he has to account purchase cost of mobiles now under an Assets and depreciation has to be provided with retrospective effect to P&L A/c.
Now, my question is whether my stand is right or wrong?
CAclubindia
