Fixed asset

[Velayutham Panchatcharam]

Please clarify, purchase of Walkie Talkie for communication purpose for factory is fixed asset or expense

[DR.MARIAPPAN GOVINDARAJAN]

It is according to the use of the instrument. If it is utilized for spread over years then it may be considered as fixed asset. There is the probability of disputing if it is booked under the fixed assets by the Income Tax Department.

[Ganeshan Kalyani]

Company has policy of capitalising only those assets which is more ₹ 5K which means it considers a revenue expenditure and not capital expenditure.

[Arumugam mailvakanam]

Purchase of walkie talkie is the capital expenditure and treated as Fixed asset. If the cost is less than ₹ 5000/- depreciation to be claimed as 100%.

[Ganeshan Kalyani]

Ok. Thanks for information.

[Ganeshan Kalyani]

Sir if assets below the mark up amount is not capitalised does it mean that it is not accounted in fixed assets register. How the treatment is given in books of accounts. Your answer will enrich my knowledge.

[Arumugam mailvakanam]

OK sir, Thanks for your information.

AI Summary

Debate on Classifying Walkie-Talkie Purchase: Fixed Asset vs. Expense Under $5,000 Company Policy and Tax Implications A query was raised about whether the purchase of a walkie-talkie for factory communication should be classified as a fixed asset or an expense. One response suggested it could be a fixed asset if used over several years, though this might be disputed by tax authorities. Another pointed out that company policy capitalizes assets only above 5,000, treating others as expenses. It was also noted that if the cost is under 5,000, it is fully depreciated. Further discussion sought clarification on how such assets are recorded in financial statements.