sayali patil (Associate Manager) (33 Points)
17 May 2011Our company had capitalised tables in the books of accounts before 5 years. Now the table tops needs to be changed and hence we are repalcing these table tops with new one.
We have around 600 tables in the company of which table tops will be changed. Please let me know whether we need to capiyalise the expenses incurred on this or it will be trated as a revenue item and will be charged to P&L.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 17 May 2011
Since By merely changing the table tops its not increasing the earning capacity of ur co. nither it isleading to an exapnsion of ur co' asset so in my view its a REVENUE exp n will b chg to P & L a/c.
It is in d form of Repairs n maintaince of tables.
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 17 May 2011
it is the furniture repair and maintenance
vikas
(ca final)
(44 Points)
Replied 17 May 2011
hold on guys !!!!!!!!
As the performance is expecting to be increase(e.i, they can be used in much better way than the previous one) as well as their would be increase in the value of the capital asset(tables) so it should be capitalise .and depreciation should be charged on them.
priyatambika
( ca final student)
(323 Points)
Replied 17 May 2011
if the expd incurred on existing asset increases the future benefit from such existing asset or as TUSHAR JI has said earning capacity of the co.then such expd need to be capitallised,otherwise it will be a revenue expd.
so, its repair & maint of furniture
shivali bardoliya
(Articled Assistant)
(42 Points)
Replied 17 May 2011
I agree with Tushar ji's view..
Rajnikant Vadigoppula
(CA, CS And CMA Final)
(919 Points)
Replied 17 May 2011
Its Revenue and charged to profit and loss A/c It will not increase either earning capacity nor Life if asset
Vivek Raju P
(Manager)
(614 Points)
Replied 18 May 2011
This has to be capitalised, the addition of the new table tops increase the life of the tables beyond its previously assed performance, the life of the table is increased. The table will not be in a position to be used had the tops not been replaced. Hence it is an item that needs to be capitalised.
There is no point in expensing the amount
Durga Datta Dash
(CA Final Student)
(76 Points)
Replied 18 May 2011
Hi
Its all depends upon where the Tables are used,For example For a carpenter the hammer is a capital Asset..Like if the tables are used for example in A ready made manufacturing company for cutting the clothes etc.... Oviously the repairing will increase the production capacity..(AS PER PARA 12.1 of AS-10)
In My viwe capitalization depands upon whwre the tables are used for...
Pankaj Pendse
(NA)
(1089 Points)
Replied 21 May 2011
yes. capitalisation will depend upon the ' USE" of asset as AS 10 suggests...
pawan
(Tax consultant )
(131 Points)
Replied 22 May 2011
my views about it is that it must be capitalised
Bcoz 600 tables top changed not 10 & 20 if it is changed only some tables then it shall be treat as REVENUE EXPENDITURE.
CA Aditya Goel
(Chartered Accountant)
(368 Points)
Replied 23 May 2011
practicaly they wont increasing the earning . so it will be charged to revenue acc.
Ashish Chhawchharia
(Chief Manager Finance)
(38 Points)
Replied 25 May 2011
Since the expense is not increasing any capacity, or enhancing the original performance of the asset, it should be booked as revenue expenses as " R&M furniture" expense and not to be capitalised
CAclubindia
