Asset capitalization

sir

it is in usd first convert it to INR so it will be around (2500*41) 102500 each so it should not be charged off to P/L account

it is against our AS10 & AS 7 so please charge dep

Dear Manjula,

per unit cost is in INR. i.e, Rs10500 each unit cost). The limit to detemine whether it should be expensed or capitalised is usd 2500 per item.

as u are accounting in india and there is nothing in my knowledge written in accounting standard but the smaal purchase related to computer accessories should be debited in p/l a/c under the head of repaires and maintenance of computer

YOU FIRST DECIDE BY THE NATURE OF THE CAPITAL ASSEST...HOW IT BE DISPOSE...WHETEHR IT IS GOING TO ADD AS ACCESSORY   OF ANY  SYSTEM RELATED TO MANUFATCURING...IF YES THEN WILL IT INCREASE THE EFFICIENCY OF PRODUCTION...DIRECTLY OR INDIRECTLY....IF ANS YES THEN ANY SORT OF AMOUNT CAN BE CAPITALISED........

IN YOUR CASE IF YOU ARE NOT DOING BUISNESS OF BUYING & SELLING OF COPMUTER & ITS PERIPHRALS.......THEN LOOKING AT THE INVESTMENT OF HUGE SUM ...I AM SUER AS PER ACC. STANDARD IT HAS TO BE CAPITALIZED...

EXCISE DUTY  PAID ON TRANSFER OF ASSETS( FROM MAHARASHTRA TO UTTARANCHAL(EXEMPTED ZONE FROM EXCISE DUTY) WHETHER TO CAPITALISE IN BOOKS OF UTTARANCHAL(EXEMPTED ZONE) PLANT OR NOT?

ANY CHANGE IF THESE MACHINERIES ARE SECOND HAND.

First of all you have to tell wether this purchase of computer is replacement or just addition. Suppose if you replace your 128 mb RAM from 64 mb Ram then it is addition and should be capitalised and if you replace a new one moniter from old demage one then it shoud be repair an maint.

Hello Mr. Arun ,

If i replace 128 Ram

it  should be capitalized ?

If i purchase or replace UPS, can it be capitalized ?

Hi Deepti,

In as you are doing maintaining accounts in india and company is working in india, it is governed under the companies Act, and the Provisions of the said Act has to be followed. As narrated in Cos Act the assets which are below Rs.5,000 can only be expensed off. So the assets purchased by the company should be capitalized and depreciation should be claimed as per AS 6 . And as per Indian AS-10 the said assets going to increase the life of the assets and also it is going to be the integral part of the  said assets so it should be calitalized.
 

Thanks

Hi All,

Weather a purchase to be treated as an asset or not completely dpends upon its nature & the purpose for purchase.I completely agree with Ramakrishna,as he said weather it has increased Production or not??but thing is every new puchase or addition may improve or increase production,we have to decide weather a purchase or addition is directly linked to the production or not??along with this one has to consider its nature..

I agree with Pramod.