Fixed Asset Capitalisation

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......

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.

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 .

and wt abt the fixtures part ,ie, abt the capitalisation status..

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.

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

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!!!

Can u pls explain the benifit tht is derived from tables, chairs , etc, which are capitalised generaliy.

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!!!!!!!!

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

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