AS 10: capitalization based on materiality

AS 1291 views 3 replies

Kunal

Article

84 Points Joined December 2008

Does AS 10 permit capitalization based on materiality...???

Case: Electrical fitings of a manufaturing plant damaged by fire and are of no use....New circuit was installed to bring back the plant to work.

Can the cost of new circuit be capitalized as the amount is very much material ??????

Replies (3)

Guest

From the information u ve given in the query, the entire expense of laying down a new electric line should be capitalised as per my view because the entire installation has been destroyed and to carry on the work further, such installation would be necessary.moreover materiality concept seems to be a bit out of question because definitely such a big loss will be material,it affects the working of the business.

Guest

our names r almost similar so, how can we varied our in views...me too agree with Miss Shini.. if the laying down cost of electricals fittings are more than 5000/-.(Which is also given in ur post that the cost is material) the whole expenditure should be capitalised and u can claim deprecieation for that

Guest

Originally posted by : Shini Sharma
	From the information u ve given in the query, the entire expense of laying down a new electric line should be capitalised as per my view because the entire installation has been destroyed and to carry on the work further, such installation would be necessary.moreover materiality concept seems to be a bit out of question because definitely such a big loss will be material,it affects the working of the business.