should installation cost of old assets to a new place of operation be capitalised?
asset is electronic items like fans and lights
installation cost includes cost of labour, wirring etc
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Installation cost
Replies (7)
installion cost of old assets is to be charged off to profit & loss a/c & not to asset ..
It should be capitalised as installation cost was incurred on replacement
Its not an improvement efficiency is not increasing...charged to pl
Its not an improvement efficiency is not increasing...charged to pl
it is not improving the life and efficiency of fan, etc so it should be charged to capitalised to fan,etc.However give the note to Notes to Accounts of the balance sheet.
I think labour and wire charges will be capitalised at the time of buying new fans and also at the time of installing old fans at the new place.
the utility it is adding to fan is that it will make the 'fan work'.
Fan is useless if it doesn't work.
But then it makes me think that by this logic repairs to fan should also be capitalised but that go as indirect expenses.
kind of confused now
Do not assign the following costs to a fixed asset:
- Administration and general overhead costs
- Costs incurred after an asset is ready for use, but has not yet been used or is not yet operating at full capacity
- Costs incurred that are not necessary to bring the asset to the location and condition necessary for it to operate
- Initial operating losses
- New customer acquisition costs
- New facility opening costs
- New product or service introduction costs
- Relocation or reorganization costs
It should be charged to profit & loss a/c.
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