Capitalization of Certain Categories

2353 views 2 replies

Please clarify whether these two itmes can be capitalized?

1. Purchse of new stabilizers for Air Conditioners. (Initially  stabilizer cost has been added to the value of A/c)

2. Tally accounting software purchased

 


 

Replies (2)

ya both would be capitalised , & sofwares comes into the category of computers & wud b eligible  for dep @ 60%

Both these items will be capitalized.

With regard to the stabilizer it varies on management policy.

It can be added to the cost or it can be shown as a seperate asset in the same block. But in the given case you can continue doing the same.

Now the software - when it is bought, its life is estimated to be more than a year, hence it should not be treated as revenue but CAPITALIZED.

But the 60% depreciation for the software is under the IT Act and it varies in the Companies Act.

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