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RO Plant Capitalisation

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Vipul Acharya

Account Officer

653 Points Posted on 07 February 2023

We have purchased a 1000 LPH RO plant which is to be installed at company owned farm house and our cmd will reside there in weekends

Will this is to be capitalised under Building or Office Equipment or Plant and machinery

kindly guide with explanation

Replies (5)

Quick Summary

This discussion explores the correct accounting treatment for a newly purchased RO plant installed at a company-owned farmhouse. Participants debate whether to capitalise it under 'Building', 'Office Equipment', or 'Plant and Machinery'. The consensus leans towards 'Plant and Machinery' if for business use, but if primarily for personal residential use, it should be added to the cost of the residential house.

CA Rashmi Gandhi

Chartered Accountant

86505 Points Posted on 07 February 2023

Capitalised under Plant & Machinery

MPR Sanjay Kumar

3145 Points Posted on 08 February 2023

@ Rashmi mam, Actually capitalisation means what ? why we are capitalising ..plse explain with example

sabyasachi mukherjee

Profession Business

28246 Points Posted on 08 February 2023

Capitalized under plant and machinery.

Vipul Acharya

Account Officer

653 Points Posted on 08 February 2023

How can we show this under Plant & Machinery, this is not for business purpose

Though it is company owned farm house, but will used for personal living or leisure