fixed assets

[kinjal goyal]

e.g. a purchased a flat for rs. 10,00,000 on 1.4.10. he got electric installation in flat for rs. 42,000 on 5.4.10. flat was put to use on 31.05.10. can u please tell me what amount should i record under flat head @ 10% dep ? and rs. 42,000 will be included in cost of flat or it will be shown separately as electric installation @15% dep. ?

[CAGOPALJI AGRAWAL]

Seems you are talking about depreciation rates as per income tax. If yes, the electrical fittings like wiring, switches, fan etc are covered under furniture and fixtures and dep rate is 10% w.e.f. AY 2006-07 onwards.

[kinjal goyal]

NO SIR ACTUALLY I WANNA KNOW IF ELECTRIC INSTALLATION WILL BE INCLUDED IN HOUSE ONLY OR NOT AS IS WAS INSTALLED BEFORE THE ASSET WAS PUT TO USE.

[CAGOPALJI AGRAWAL]

If it is like laying down the common wiring etc, it would be part of house and the electrical fittings like airconditioner, expensive outside fittings should be treated as furnitures and fittings.

AI Summary

Electrical installation treatment: inclusion in asset cost versus separate furniture classification affects depreciation entitlement under income tax. Permanent common wiring and fixed electrical installations that form part of the building should be capitalised as part of the house; separable electrical fittings and appliances should be treated as furniture and fixtures and accounted for separately for depreciation, with the timing of installation relevant but secondary to whether the work is integral to the building.