expense (wage for installation , trasport etc) incurred in purchase of fixed asset journal entries
2- can debit wage a/c and then tranfer the balance to asset a/c ??
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Fixed asset purchase expense
Replies (6)
Quick Summary
Yes.All incidental expenses shall be added to cost of PPE
All expenses incurred incidental to bringing the asset to its working condition has to be capitalized. So it's put to use.This is as per ICAI GUIDELINES AND ACCOUNTING STANDARD.
Directly account wages, transportation exp as PPE
PPE a/c Dr
To Bank
PPE a/c Dr
To Bank
Can we also do this as
wages a/c dr 1000
to cash a/c cr 1000
Asset a/c dr 1000
to wages a/c cr 1000
wages a/c dr 1000
to cash a/c cr 1000
Asset a/c dr 1000
to wages a/c cr 1000
Yes.It can be done .
Final effect is
Asset(PPE)
To Cash/ bank
Final effect is
Asset(PPE)
To Cash/ bank
You can debit all teh expenses to the particular Fixed Asset.
All these expenses are directly linked to the fixed assets
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