Capitalization of Signages

[JOHN SHANNEL]

Our organisation is displaying signages in retail outlets and pays monthly rent to the retailers for the space provided. Can i capitalise the signages since these has a life of 3 years.

AI Summary

Signage Costs in Retail: Revenue Expenditure Due to Short Lifespan, Clarified by Legal Precedents and IND AS Guidance. An organization inquires about capitalizing signages used in retail outlets, which have a lifespan of three years. Responses indicate that such expenditures are considered revenue, not capital, based on legal precedents from the Madras and Punjab & Haryana High Courts. The courts ruled that signages do not create an enduring business asset due to their short life and frequent replacement needs. Further clarification is sought regarding the treatment of such expenses under IND AS and the Companies Act 2013, with a request for expertise from a specific forum participant.