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Please tell me on what bases a "purchase of asset" should be treated as expenses / or / as a asset (capitalize). ?????
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Asset increases the productivty of your organisation. And it is for longer period. Therefore it is not a expense therefore it is a asset
The definition of Fixed asset as per AS 10, states the an asset which is held with at intention of use for Producing goods or Providing services And in not held for sale in the normal course of business is called as fixed asset.
Though some assets does fall under the above definition but are charged to revenue as the value involved in those asset in not material.
Usually the Assets upto the value of Rs. 5000/- are not capitalised but are charged to Statement of P&L in the year in which they are bought.
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