Hi
I just want to knw that whether an expense incurred for construction of glass cabin will be capitalised or charged to revenue.
And if it will have to be capitlaised than under which head will it fall.
Ashish Arya (CA-Final) (58 Points)
28 May 2011Hi
I just want to knw that whether an expense incurred for construction of glass cabin will be capitalised or charged to revenue.
And if it will have to be capitlaised than under which head will it fall.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 28 May 2011
Its niether increasing d value of asset nor its an expansion...i think its in nature of maintainence....so i think its a revenue exp n chgd to P & l......
Ashish Arya
(CA-Final)
(58 Points)
Replied 28 May 2011
its a new glass cabin constructed in an office.
cant it be considered as a type of fixture.
Moreover will it creat a difference if the property is a rented property,ie, the premises of office are on rent.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 28 May 2011
It will not mak any difference even if its on rent so long payments are made by your co. n original bills r in the name of co .
Ashish Arya
(CA-Final)
(58 Points)
Replied 28 May 2011
and wt abt the fixtures part ,ie, abt the capitalisation status..
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 28 May 2011
No its not a fixture ...its my view ....since ther is no monetary benefit which is returned by the glass in cabin afetr makin d expenses.
U refer for d defintion of asset as mentioned in AS-10.
Ashish Arya
(CA-Final)
(58 Points)
Replied 28 May 2011
i already did...
bt the same is considered to be used for more than 1 year..n moreover adds to the value of construction in the premises
Moreover the criteion for capitalisation does not relates only to monetary benifit arising out of the asset
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 28 May 2011
Can u explain how the it adds to the value????????in what manner
What benefit do u derive frm it other monetary benifit??????? as u mentioned above!!!
Ashish Arya
(CA-Final)
(58 Points)
Replied 28 May 2011
Can u pls explain the benifit tht is derived from tables, chairs , etc, which are capitalised generaliy.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 29 May 2011
On tables - Normally all the office work in done lik admin,accounting, etc...so it helping co in conducting smooth business.
On chairs -without sitting how will employees work wherits required...........for business decision making ????????
U r askin me a q or u want to solve ur querry???????/
U did not answer ma q infact u r askin me a q??????????????
ifu r tht much sure thn don ask such q on CCI or if u ask thn be polite in ur argument?????????
its not a case v r fighting in SUPREME COURT!!!!!!!!
HARPREET SINGH
(Chartered Accountant)
(79 Points)
Replied 31 May 2011
Hi Ashish,
We can take this in both ways, my opinion is to capitalize cabin expenses as this is a permanent (long term) structure & will get benefitied for long term. Its not one time benefit. If we have any expense like labours temporary houses, we can expense it out as this is temporary thing but Cabin is a long term fixture like other furnitures have.
Regards
Harpreet Singh
Prasad
(Sr. Manager)
(617 Points)
Replied 31 May 2011
Rajnikant Vadigoppula
(CA, CS And CMA Final)
(919 Points)
Replied 31 May 2011
harpeet is right, following is a test to capitalise or not
1.A new asset came into existance
2. increase life of asset
3.decrease in operating cost of business
4. increase in revenue earning capacity
so in my view, glass cabin is a type of fixture just like electrical fittings
hence first condition is satisfied then it shoul capitalise
Ashish Arya
(CA-Final)
(58 Points)
Replied 06 June 2011
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