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Assets capitalisation- ind as16

BHUTESH KUMAR MALVIYA (Sr. Account Officer(DSM Sugar-Rajpura)) (47 Points)

20 December 2017

Hi Experts,

I have a querry about Assets Capitalisation.

We have purchased New 60 Plastic Chairs(Indi. Cost-325/- Each). Whethr it would be capitalised As per Ind AS16(We are covered under Ind AS- Net Assets 750 Crore.) or it would be treated as revenue nature expenditure.?

Please Help.

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4 Replies

satish (teaching) (2046 Points)
Replied 20 December 2017

If asset satisfies the recognition criteria as per IND AS 16. then it can be capitalise.

Definition: Property, Plant & Equipment are tangible items that:

- are held for use in the production or supply of goods or services, or

- for rental to others, or

- for administrative purposes; and

- are expected to be used during more than one period

Recognition criteria:

The cost of an item or Property, Plant & Equipment shall be recognized as an asset if, and only

a) it is probable that future economic benefits associated with the item will flow to the entity

b) The cost of the item can be measured reliably

sudharshan reddy (CA ) (42 Points)
Replied 21 December 2017

there is no limit in IND AS (as it was there earliesr i,e Rs. 5000)

Now company has to make a proper policy to decide...

on the basis of accoutning policy employed by the company for smaller value of fixed assets it has to classified.

Ans: can be capitalised (if there is no accounting policy for the company for smaller value of items)

BHUTESH KUMAR MALVIYA (Sr. Account Officer(DSM Sugar-Rajpura)) (47 Points)
Replied 21 December 2017

Sir,

First of all thanks about your valuable suggestion.

As you aware about Schedule II of Companies Act 2013, Useful life of Furniture & Fixtures decided in 10 years Class. However plastic Chairs has no certain life. I may carry more than one years, may not depending upon use.

What will be the clear view in this circumastances.

satish (teaching) (2046 Points)
Replied 21 December 2017

There are two circumstances arise

As per management, useful life is more than provided: – The useful life can be taken either provided by the management or as provided by Schedule II.
As per management, useful life is less than provided: – The useful life as per the management is to be taken for charging depreciation.