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Asset increases due to the following :
1. Acquisition or procurement of a new asset like machinery, etc.
2. Sales Revenues increases Accounts Receivable.
3. Production of finished goods increases finished goods inventory.
4. Advance payment to supplier, etc.
Cost of erection in case of Plant and Machinery.
we have two categories:
1- the increase in assets due to the increase in liabilities and owners equity like:
- new investments financed by liabilities or capital
- Accrual entries
- revaluation of assets
2- increase in an asset and a decrease in another asset
- decrease in cash and increase in inventory
- decrease in inventory and increase in cash
decrease in cash in increase in prepaid and securities
- decrease in inventory and increase in receivable
the previous are some examples
Agreed with the answer. Mr VENKATARAMAN
Increase in asset account is not just about property, plant and equipment, it may be an increase in receivables which only come with new credit sale or it can be an increase in investment in associate account which only come if our associate ended the financial year with positive figure at the bottom line.
and repairs to plant and machineries
an asset account is increased with a debit.
An asset account increases in the following instances:
1. Addition or purchase of an asset.
2. Substantial improvement / renovation to the asset which results in increase in the life of the asset.
3. Revaluation of an asset which has higher market value than the book value.
4. Credit sale results in increase of the current asset- debtors.
5. Payment of advances increase the asset- debtors
6. Receipt of advances increase the asset- cash/bank
Generally speaking anything that 'comes in' with a debit increases the asset account.
* - Re-evaluation
* - Re-correct depreciation
* - Increase the original maintenance or add parts
A substantial increase or material addition in assets, will result increase assets. In other way, the revaluation or overhauling of Plant or Machinery will increase the value of assets.
Agreed with colleagues answer
