Asset or expense

We have a cold store and purchased pallets for that cold store (costs more than 5 lakh), so my question is how to show them in accounting -: as separate asset, land & building asset or expense (if yes then please mention in which expense head)

 

Note - Pallet are made from wood, it is used to keep goods in cold store as we can't directly keep goods on the floor due to slippery surface

Thanks in advance for answer

Replies (4)
Quick Summary
When purchasing pallets for a cold store costing over 5 lakh, consider their accounting treatment. If the pallets are expected to last more than a year, they should generally be capitalised as an asset, likely under plant and machinery, and depreciated over their useful life. If their lifespan is shorter, they may be expensed. The cost can be added to the carrying amount of existing Property, Plant, and Equipment (PPE) with appropriate disclosure.

What's the life of these pallets.

AS10.13&14 is unclear about recognition. How ever additions are included in the carrying amount of PPE. So add the pallet cost to the carrying amount and disclose the information. 

It is classified as plant and machinery if the life of the pallets are more than 1 years. otherwise expense out.

Clearly, you are using these pallets for a couple of years for storage of inventory, it should be capitalised as an asset  and depreciated over its useful life like other furniture.

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