When any fixed assets is acuried by the company, all the exp. incurred to put the fixed assets in usable form are Capilatised, including Trial run exp.
Now my query is that, exp on trial run are to be capilatised & the reveune generated during the trail period are to be shown in P&L a/c or it has to be deducted from trail run exp. & capilatised the net exp, if the revenue is less then exp.
but what to do when revenue is more then exp. incurred.
give ur valuable suggestion
When the revenue is more than expenditure, the remained amount after capitalization is shown in P&L A/c as profit...
Expenses on trial run will not be capitalised it will be chrged off and hence revenue will ultimately go in P/L account...
we are deducting tds @ 1% because party is individual but party is changed as company without notify us. we are continuing 1% it is correct or not.
| Originally posted by : Mohammed Ali | ||
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we are deducting tds @ 1% because party is individual but party is changed as company without notify us. we are continuing 1% it is correct or not. |
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IN CASE OF EXPENDITURE IN EXCESS OF REVENUE THE DIFFERENCE BETWEEN THE TWO WILL BE CAPITALIZED , IN VICE VERSA SCENARIO THE EXCESS AMOUNT WILL BE CREDITED TO P& L A/C
Agree with prateek
All AS at one place
https://www.caclubindia.com/forum/all-as-at-one-place-87927.asp
Hi All,
Please mention the source and basis for your opinion..
As i think it should be deducted from cost of asset( Excess of revenue over trial run expenses)...
Correct me with your supportings..
Regards,
Thanks in Advance
Trail run expenses are the part of installation process. So, pre installation profits are capitalized..
Capitalization means revenue deducting from cost of assets.
what is the meaning of trail run expenses???
@ samriti
Imagine you are running an amusement park and park just purchased a new ride.. ok? Now after installation the ride was made to run for the whole day(withoout opening it to public) to test its running capacity, durability etc.. now electricity charges, installation charges, any repairing done during the trial run are trial run expenses, and it will be part of cost of machinery in your balance sheet.
Now say the company earned some income buy letting some customers enjoy the new ride, just to check its viability, customer experience, machines smooth running with weight of people etc.. now company will earn some income by doing so. this income will be reduced from the cost of machinery.
Simple?
fixed asset before its running what ever the cost incurred should be dedited to that asset a/c where as when it is used either for trial or for any other kind it should be noted that the expenses and revenue should be debited and credited to profit and loss account.
CAclubindia
