Whether Cost of Capitalization of a machine includes raw material or semi finished goods utilized for trial run of a machine.
This is not a new project but a new machine has been imported for an existing business for specific purpose
CA K. K. Srivastava
No,FG and SFG utilised during the trial run are not capitalised,rather the sales realisations of the produce is deducted from the trial run expenses. Rectify me if I m wrong
yes it will be capitalised
any expense incurred on trial run of the machinery should be capitalized
| Originally posted by : future ca | ||
 |
yes it will be capitalised |
 |
As per provisions of AS 10 'Accounting for Fixed Assets',
expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost.
However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ...
-----------------------
Anit
| Originally posted by : Anit | ||
|
|
As per provisions of AS 10 'Accounting for Fixed Assets', expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost. However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ... ----------------------- Anit |
|
Good Explaination ...
agree with Mr. Anit
| Originally posted by : future ca | ||
|
|
any expense incurred on trial run of the machinery should be capitalized |
|
Yes i too feel the same... it should be capitalised.... even though it is not a new project....
yes it is very clear with AS 10... it will be capitalized..
Expenses on trial run will be capitalised..
| Originally posted by : vandana | ||
|
|
yes it is very clear with AS 10... it will be capitalized.. |
|
AGREED.
Sir,
AS - 10 is very clear on the query you asked.....
As per AS-10 it should be capitalised
CAclubindia
