Capitalization of computer

10799 views 6 replies

Hi

My question for today is

 

Our Company has purchased items such as Hard disk, motherboard, RAM, SMPS, processor and cabinet.. now it is obvious that a CPU is being assembled in house.

 

So, here CPU has no utility of its own, its utility comes when a monitor, keyboard, mouse etc are attached to it

 

So my question, should these purchase of items said above be capitalised(or written off as Repairs and maint.)?? if yes, why? and at what value?

Replies (6)

Boss, just think simple, do not get complicated by thinking several things. In your case in it is to be capitalised, because such things are assembled to an asset.

Agree with Sanjay....... You should have to capitalised.

The above items purchased are to be capatalised as they have resulted in the creation of an asset.

Also the assets are to be treated as computers for both Companies act & IT act depreciation.

Originally posted by : Sanjay Bag

Boss, just think simple, do not get complicated by thinking several things. In your case in it is to be capitalised, because such things are assembled to an asset.

I agree with him. It is to be capitalised.. Suppose if you are not capitalising it and charging it off to p&l and later if you buy a monitor and othe accessories related to it, what will you do that time?? so its better to capitalise now.

All the above replies will be applicable if CPU and other parts are purchased for buying a new computer. But if CPU of old computer is getting replaced then why it should get capitalised? Because it is not improving the performance of the computer which was originallly purchased. It will just maintain the performance. 

HOW TO CAPATLIZE IN BOOK OF ACCOUNT  SECOUND HAND COMPUTER IF PURCHASE COMPANY WHATS ARE TREATED IN ACCOUNT BOOK

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