Dear Experts,
In our Company, we had capitalised steam pipeline for 50CR 7 years back. Now the Insulation of steam pipeline needs to be replaced which will cost around 6 Cr. Can I capitalise this cost of 6 Cr on the steam pipeline assets, considering that the same will last for next 4-5 years and also that without this Insulation work steam line may not perform.
Thanks & Regards
Yes! Cost-7 years accumulated depreciation= NBV. From this, Its not impairment but Overhaul expenses must be deducted. Say NBV is now 30cr and that particular part is 1cr if it wasn't spoiled. You add a new part for 6cr then you must derecognize the old pipeline value and capitalize this value 30-1+6cr
Thanks for the prompt revert
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