LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Capital or revenue expenditure

CA Shalini Aggarwal (delhi) (119 Points)

14 April 2014

if we have purchased car of rs. 500000/- then after some days we purchased car accessories of rs.4500/- then should we capitalised Rs. 4500/- or treated as revenue exp?

Reply
Follow
Share

8 Replies

Krishna Kanta Som (CA FINAL STUDENT) (132 Points)
Replied 14 April 2014

That should be depend on the type of accessories.If it it is car cleaner then revenue exp.

Rahul jain (LEARNING & TEACHING) (435 Points)
Replied 15 April 2014

it will depend upon the type accessories of car......if from this accessories
the capacity or effeciency of car increases then it will be ecapitalised otherwise revenue.....

1 Like

kuntesh (semi qualified CA) (44 Points)
Replied 15 April 2014

Which car accessories hv been bought ?

CA Vivek chaudhary (Delhi) (1339 Points)
Replied 15 April 2014

If capacity or efficiency increases then treat it as capital otherwise waise to revenue hi hoga

Ashok (Industry) (416 Points)
Replied 15 April 2014

This concept of increasing efficiency is theoritical and difficult to apply in practise. Accessories bought along with the car can be capitalized. A few days gap should not matter. If the accessories are brought after a delayed time period its better to treat it as revenue exp.