Capitalization

AS 1167 views 15 replies

Dear All

 

Whether TATA Photon Plus (40Nos) purchased by an IT company would be treated as expenditure or will it be capitalized.

 

Thanking You

Ravi

Replies (15)
Definitely expenditure

Dear Ravi,

Internet card once purchased by company is a property of company and it should be capitalised but if you think practically it has no market value after purchasing ........because this are not transferable.

 


Hence in my opinion it  should be charged to P&L a/c in same year.....

 

 

Regards

Madhusudan

 

 

It Should be charged to revenue A/c and not be regarded as Assets for the IT Co.

I think Cost of each photon plus is less than 5000/- hence there is no need to break the head. you can charge to p & l account

Dear Kishore ji

There r 40 nos of TATA data card ........ hence collectivly it is a very big amount....
would your answer still remain same.

 

 

regards

Madhusudan

When taking into consideration 40 nos of same items, cost of individual item should be checked. individually if its less than Rs 5000/- then the same is taken to profit and loss account. besides the guarantee for the item does not exceed one year.there is no long term benefit. my opinion is take it to profit and loss account.

It should definately a revenue item because Company have to Pay regular its subscrition

expenditure ..... n truly agree with tht every item in p&L should nt exceed 5000 if yes so ...then its disclosure should b there.

capitalise them and then charge off 100% depreciation in the same year as value is less than 5000. This will ensure tracking of them as assets at a later stage and any loss may be charged to the employees.

Charging them to expenses instantly may not be a good practice, unless there is a very good tracking mechanism for small items.

i think it should be capitalized..They can be used for period of more than one year & Total amount of 40 pcs will be material.

I  m fully agreed with Answer of Mr. Vivek ....because amount of 40 nos is material in it self ....same can not be charged directly to revenue ....

 

 

 

Regards

Madhusudan

charged to p&l account as revenue exp bcoz no market value.

its should be treated as an expenditure in the books of acccounts.

As a normal practice it shud be charged to expenditure


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