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Capitalisation of bundled goods and services received

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We have entered into a contract with a supplier for office renovation of a rented property and also supply of furniture for the same property for which the supplier has billed a single amount without bifurcation of the furniture and office renovation expense .Whether this expenditure would be capitalized or not and with what amount.
Replies (4)

There are Two  expenses 1)  Renovation expenses of  rented  property  2) Purchase of  Furniture ( Asset ) , so please  Clarify  , Renovation has been done  using Furniture  or  both are different  expenses . 

Kindly arrange for the same. Contact with supplier.
@ prasad Nilugal both are different expenses , we have entered into a contract with a supplier to renovate our office which includes painting of walls , repair etc and also supply of office furniture for which a lump payment is agreed. So how this expense is to be treated in our books.

If both are different expenses then , you must have ask for  for two different Invoices , one for expenses and another for  Asset Purchase , then painting and renovation  expenses  will be Revenue Expenditure  , and  Furniture you can Capitalise . Only one Invoice for both different  expenses will be problematical for  Audit  Purpose .   

Take more Opinion on this .  

   


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