Accounting Treatment

Transformer & Energy Meter will be considered as inventory as your co are doing business of power distribution.

>> Rajesh

I agreed with your views. But the actual prolem is as follows:-

1) Suppose one Distribution Transformer cost is Rs.40000/-. It is being treated as Inventory after its purchase and kept in the stors. To provide new service connection one Transformer used and its cost is capatilised and one Asset is created ( Service line including Transformer). The life of the transformer say 10 years. But after 2 years the said transformer became defective and that was replaced by a new one which cost is Rs.45000. Then what Accounting Treatment will be made for the replacement Transformer.

The defective transformer is repaired at a cost of Rs.10000/-. Then that Repaired Transformer is used for another place to replace one defective Transformer , which may be new one or repaired. Then what accounting tratment will be made. At that time that Transformer (which is already Assets) have resedual life for claim depreciation.

2) Same for Meter above type of Practicable Problem arises.

As such it is requested to help me on the background of any Act, Provision in respect of Distribution Power Business. It is also requested to know about the accounting treatment of other power distribution Companies Accounting Principal in this context. Please let me know the accounting treatment of Telephone Sets so made by BSNL.