gud evng frnds-
a company purchase the second hand machinary in which it requie the oil for first time to run properly,,,,,,,the oil cost is significantly more & imporatatant and the accountant says that the oil will run in the pipe line of boiler through life time hence it is part of production and should be capitalised.
But as per AS-10 it is not any kind of asset it is an overhead and it is a revenue exp.
but they capitalised as it is necessary to run machine and after that any purchase of oil will treate as revenue exp.
is it correct?....plz suggest me right accounting...?
thnx
CAclubindia
