SUPPOSE A TRAILER RENTING COMPANY SPENDS RS. 2,00,000/- OR MORE IN REPLACING THERE TYRE OF THE TRAILERS CAN IT BE CAPITALISED ON THAT PARTICULAR TRAILER
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Capitalisation of expense
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As per AS-10, expense is capitalised if it increase asset's performance beyond original performance, that was when asset was bought.
Since, tyre change will not normally increase performance, hence it is not capitalised.
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