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Accounts payable relating to purchase of PPE

Others 1224 views 1 replies

Bhagavan

Team Lead

36 Points Joined June 2009

Hi,

i have one doubt here the company purchased an Asset on 20th March 2009 for Rs10 laks, by paying cash of Rs 6 laks and Rs 4 laks as credit payable with in 1 month. Now the company pays Rs 4 laks on 19th April 2009 (New FY), As per AS 3 this transaction has to be recoreded in Investing Block of Cash Flow Statement.

As an Analyst do we need to consider the Rs 4 laks as Capital Expenditure or Repyment of liability.

Replies (1)

Amol Gopal Kabra (CA,CS,DISA)

Practicing CA

8639 Points Joined April 2009

The item will be repayment of liability, but toward capital expenditure.. In either case. it will come under the Investment Block.

In the we acquired the asset, the asset was recprded at total value, despite of the part payment. SO this will be a case of repayment of liability on account of capital expenditure..