Capitalisation of Fixed Asset....

(Guest)

Fixed Assets should be capitalized on the date of Installation.

First!!!! (student) (162 Points)
Replied 15 February 2010

Can u plz elaborate along with the wordings of AS if possible...

Regards,

A learner (Corporate Accounts ) (345 Points)
Replied 16 February 2010

Dear,

In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use. May be this period can be long

As far as income tax is concerned you are allowed depr. from the date put to use

Ask if unclear....

Correct me if you find it wrong...

Thanks a ton

CA Harit Kapoor (Chartered Accountant) (71 Points)
Replied 17 February 2010

i was reading my audit book the other day.....it said that in case of depreciation....the policy followed is when asset was put to use and not when asset was ready to use.......so can you tell m the reason 4 dis??..as to y we are doing this??...which principle is the audit of fixed assets following?

First!!!! (student) (162 Points)
Replied 18 February 2010

Originally posted by : Sunny Mehta

Dear,

In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use. May be this period can be long

As far as income tax is concerned you are allowed depr. from the date put to use

Ask if unclear....

Correct me if you find it wrong...

Thanks a ton

Thanks for the reply.. But I have no where come across in AS 6 and AS10 that u have to capitalise it at ready to use,though i know practically u capitalise it as per Ready to use method... If u could provide me the wordings of AS it would be much more helpful...

Thnx..

Regards

First!!!! (student) (162 Points)
Replied 18 February 2010

Originally posted by : Sunny Mehta

Dear,

In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use. May be this period can be long

As far as income tax is concerned you are allowed depr. from the date put to use

Ask if unclear....

Correct me if you find it wrong...

Thanks a ton

Thanks for the reply.. But I have no where come across in AS 6 and AS10 that u have to capitalise it at ready to use,though i know practically u capitalise it as per Ready to use method... If u could provide me the wordings of AS it would be much more helpful...

Thnx..

Regards

First!!!! (student) (162 Points)
Replied 18 February 2010

Originally posted by : Sunny Mehta

Dear,

In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use. May be this period can be long

As far as income tax is concerned you are allowed depr. from the date put to use

Ask if unclear....

Correct me if you find it wrong...

Thanks a ton

Thanks for the reply.. But I have no where come across in AS 6 and AS10 that u have to capitalise it at ready to use,though i know practically u capitalise it as per Ready to use method... If u could provide me the wordings of AS it would be much more helpful...

Thnx..

Regards

Puneet Mittal (Sr. Officer Accounts) (196 Points)
Replied 18 February 2010

Dear

As per income tax you can take the benifit of dep after put to use it means that uses of assets is start for buisness pupose & you can claim the expenditure as dep.on it. but ready to use means that assets is ready for use .but actualy we have not use the assets If we are not use the assets in the Buisness than we can not claim the dep.

Regards

Puneet Mittal