It is true in some cases only .
If tou write off the entire amount of expenditure to P/L in subsequent year(as in case of depreciation ) then it is true.
For example assets repaired (reveuue expenditure) Rs. 5000 added to cost of assets treating ait capital exenditure. In subsequent yera if you transfer the amount as depreciation the ultimate effect will be NIl . But if the assets is sold suring the period or some capital exp. not charged to P/l then the statement will noit hold good.
manmohan is right.
Manmohan is right.
It will definately impact the profit for the current year and for future years also as depreciation will be provided for a no. of years and till then the profit will be overstated.
| Originally posted by :himanshu | ||
| " | if revenue exp. is treated as a capital exp. in short run profit of the current year is overstead but in long run it is charge P & l by way of depreciation . No effect on business profit Is True or False. if true , why |
" |
If we do this.. "The Financial statments are not True & Fair"
If you do so than There are no FA on B/s date bcoz You written off in a year..so it is misguide the user of financial statement..
CAclubindia
