Hi Friends,
1) The company has purchased some spare parts which can be used in connection with an item of that fixed assets and its uses is irregular, such parts can not be used for other machineries so where this parts should be shown, whether as per AS -2 as an inventories or as per AS -10 Fixed assets. ???
2) The company has purchased Mobile worth Rs.20,000/- so can we capatalised? if yes under which group and which rate of depreciation will apply?
reply me
Thanks in advance
hii,
1.Loose tools or spare parts relating to that fixed asset can be valued as per AS-2 inventories.
2.mobile purchased can either be shown as indirect expense and Fixed asset, if you specifically mention the nature of it.
For ex: if that mobile is for commercial/business purpose/use then it has to be capitalised by charging that mobile under fixed asset and the depreciation is to be charged as per the companies act if that is a company and if that is other than a company(Individual/huf) then as per the income tax slab rates the depreciation will be provided at the year end.
Regards,
Ankit Gupta
Thanks for your reply.
AGREED WITH ASHWANI...
whether to capitalise machinery spare undr as-10 or not will depend on the fact of each case. however,the spare of following types should be capitalised being of the nature of capital spare.
1. machinery spare which are specific to aparticular item of fixed asset
2. their use is expected to be irregular
note: spares which are not specific to a particular item of fixed asset should be treated as inventories for purpose of AS-2.
Reference:D S RAWAT,18th edition ,Pg 23
Personal belongings do not qualify to be an asset. Hence the mobile if purchased for personal use cannot be capitalised. However if the same is used for commercial purpose or used by a self employed person, it can be treated as asset and depreciation can be claimed..
CAclubindia
