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Accounting of fixed assets - computer

AS 12695 views 42 replies
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Student
23 Points Posted on 27 October 2013
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..
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On 27 October 2013 at 19:06
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Mr.
44 Points Posted on 27 October 2013
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.
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On 27 October 2013 at 19:39
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CA Final ICWAI Final
37 Points Posted on 27 October 2013

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. 

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On 27 October 2013 at 20:12
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Account officer
26 Points Posted on 27 October 2013
It is capital expenditure.... Its incresing capacity anx life of computer...
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On 27 October 2013 at 20:12
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Practice
690 Points Posted on 27 October 2013
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
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On 27 October 2013 at 22:29
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Article Trainee-CA Final
1942 Points Posted on 28 October 2013
Originally posted by : Saurabh Maheshwari

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...

 

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.

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On 28 October 2013 at 10:18
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Chartered Accountant
25 Points Posted on 28 October 2013
It should be treated as capital expenditure if value is less than 5000 same can be expensed out
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On 28 October 2013 at 10:45
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Manage Finance
31 Points Posted on 28 October 2013
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
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On 28 October 2013 at 10:45
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lawer
55 Points Posted on 28 October 2013
It is capital exp as per hyd bench judgement
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On 28 October 2013 at 10:46
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24 Points Posted on 28 October 2013
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.
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On 28 October 2013 at 10:47
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24 Points Posted on 28 October 2013
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.
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On 28 October 2013 at 10:48
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CA
26 Points Posted on 28 October 2013
If the new HDD is with more capacity (increasing the performance) then we can categorize it as Capital Exp.
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On 28 October 2013 at 10:49
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articles
23 Points Posted on 28 October 2013
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
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On 28 October 2013 at 10:49
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Audit Executive
711 Points Posted on 28 October 2013
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
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On 28 October 2013 at 10:50
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Chartered Accountant
186 Points Posted on 28 October 2013
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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On 28 October 2013 at 10:58


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