Sharath (Asst. Manager Finance) (30 Points)
20 September 2013Hi,
We have purchased some Cable Tensiometer from local supplier. The purpose of this unit is to measure the tension of the mechanical cables of aircraft.
Could you please assist me whether i should capitalize this item? If YES, what would be the ledger name i have to create in my books.
Devendra
(Chartered Accountant)
(4780 Points)
Replied 20 September 2013
Capitalize the Asset under the head Machinery and depreciate @ 15% p.a
CA. Mayur
(Service)
(147 Points)
Replied 23 September 2013
I am not industry expert but what I understand from your query is that it’s a acquired aircraft maintenance tool which is being assessed for capitalization.
There exists a thin line of demarcation for charging the maintenance cost to P&L or capitalized as per Para 12 of AS 10. Based on guidance of AS 10.expenses need to be evaluate that whether such expenses will increase the future economic benefits from the assets as compared to previously assessed standard of performance and if the condition is satisfied than only such expenses can be capitalized.
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