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Accounting of fixed assets - computer
It is correct that it should be treated as Cap ex, but sometimes it may be treated as Rev ex
For example: When it is replaced by harddisk of second hand computer, it may not enhance the capacity of the computer,
In such case it is Rev ex..
It is Capital expenditure, No computer will work without hard disk or monitor. According to AS-10 Accounting for Fixed assets, a replacement of part which will enhance the useful life of assets can be treated as capital expenditure.
As per As 10 fixed asset, The repair expenditure or improvement is made, shall be capitalized only if enhance the capacity and useful life,
so, in the case of replacement of hard disk and monitor will not leads to enhancement of performance and useful life, so it should be treated as revenue expense.
It is capital expenditure.... Its incresing capacity anx life of computer...
capitalise the new cost of monitor & hard disk bcz it enhance the economic. benefit of computer... but sale value of old monitor and harddisk will reduce the fixed assets
| Originally posted by : Saurabh Maheshwari | ||
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See Divya...the system with new hard disk will work better than that with old hard disk...thats why there is improvement in capacity and the cost for such replacement(improvement) can be capitalised... |
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In my opiniion...The capacity of the new hard disk should be compared with the original capacity of the old hard disk and not the depreciated capacity.
It should be treated as capital expenditure if value is less than 5000 same can be expensed out
It is not qualify for capitalization of assest because as per as 10 it must enhance the original capacity from as its when itroduce.it is revenue expense and charge it to profit and loss
It is capital exp as per hyd bench judgement
The whole system is not replaced, only a part, hard disk or monitor is replaced. It may be assumed that it is enhancing the capacity. Hence to be capitalized. No need to write off PC.
The whole system is not replaced, only a part, hard disk or monitor is replaced. It may be assumed that it is enhancing the capacity. Hence to be capitalized. No need to write off PC.
If the new HDD is with more capacity (increasing the performance) then we can categorize it as Capital Exp.
In my opinion it should be take as capital expenditure because there is improvment in working capacity of fixed asset. That's why it will qualify for capital eaxpenditure
Its a debatable issue.In my opinion consider the same as capex becoz it obviously increases the life of principle asset i e. cimputer.capex with computer.
VIKASH KUMAR JAIN
Under materiality concept, if the cost is less than Rs. 5000/-, you can write it off to revenue notwithstanding the enhanced capacity etc of the machine.
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