Capitalisation of expenses

Dear members,

Pls tell me what is meant by capitalisation of expenses ? And what is the accounting treatment for that ? In tally, can we know which are the capitalised expenses and which are not ? How?

Thanks...

Replies (2)

any expense which is used to develop the fixed assets is to be shifted to capital account, 

entry should be alike

Plant and machinery Dr .........................

to 

Repair and maintaince to machinery ........................................

 

Computer & Accessories Dr ...............................

to

Computer maintancnce ..................................................................

 

 

here we have to segragare the invoices which are nature of capital goods but posted in the expenses and reverse the entries through journal of the specifc invoice amounts.

another incident is taxes/ duties / freight paid on imported machinery, compute the total sum paid on the capital goods movement 

 

plant and machinery dr .........

to

customs/ tax / freight  ............................................................

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