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

Asset classification: capitalisation threshold and useful-life determine whether communication equipment is recorded as fixed asset or expense. Whether a portable communication device is treated as a fixed asset or an expense depends on its intended use and the period over which benefits are expected to accrue. If the device is used over multiple years it is capitalised as a fixed asset, subject to the company capitalisation threshold. Items below the threshold are often treated as revenue expenditure and expensed, with depreciation or immediate write-off applied per accounting policy and tax practice.