Fixed Assets should be capitalized on the date of Installation.
Can u plz elaborate along with the wordings of AS if possible.
In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use . May be this period can be long
As far as income tax is concerned you are allowed depr. from the date put to use
Correct me if you find it wrong.
i was reading my audit book the other day. it said that in case of depreciation. the policy followed is when asset was put to use and not when asset was ready to use. so can you tell m the reason 4 dis. as to y we are doing this. which principle is the audit of fixed assets following?
In companies act as per AS-10 & AS-6 depreciation is allowed from the date assets are ready to use and similarly AS-16 says to capitalize borrowing cost till date the assets are ready to use. We capitalize them on that date. Reason given here is depreciation occurs even with efflux of time so assets can be depreciated between the period of ready to use & put to use. May be this period can be long
As far as income tax is concerned you are allowed depr. from the date put to use
Correct me if you find it wrong.
Thanks for the reply.. But I have no where come across in AS 6 and AS10 that u have to capitalise it at ready to use,though i know practically u capitalise it as per Ready to use method. If u could provide me the wordings of AS it would be much more helpful.