Fixed assets

Others 728 views 2 replies

Nilesh

Accountant

25 Points Posted on 01 March 2014

We have a partnership firm and we are engaged in shaping and polishing diamond. During the purchase of machine we have to purchase its part from different vendor and making one machine at our own factory.

So for this how to post enteries in fixed Assets Register ? What is the tools with mgmt. through which we can justify that by adding different parts we are making one machine ?

Replies (2)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Posted on 03 March 2014

Dear nilesh

You can make entries in CWIP(capital work in progress) and after that when it is ready to use then, make a journal entry to transfer the same to the respective fixed asset account. for eg.

1. CWIP(Machine X) Dr. ******

To Vendor A Cr. ******

To Vendor B Cr. ******

2. When machine is ready to use then

Machine X a/c Dr. *****

To CWIP(Machine X) Cr. *****

I hope it will help ur case ...

Milind M. Kulkarni

Practicing CA

597 Points Posted on 13 March 2014

As regards entry in Fixed Assets Register, you have to enter it only once, after all the parts are assembled into a single machine. While passing entries in books of account, first enter various parts as Capital WIP, crediting respective vendor accounts as mentioned by Manoj above. After the machine is assembled, debit the machine (fixed assets account), crediting all the capital WIP accounts debited earlier.

Since the machine will be assembled in your premise itself, check if your firm needs to take registration under Central Excise and pay any excise duty on machine assembled (since it fits in the definition of manufacture under the Excise Act).