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For a acquisition of fixed asset will be capitalized , through the amount of annual depreciation shall be debited to profit & loss account why ?

1.Revenue Expenditure2.Capital Expenditure3.Indirect Expenses4.Direct Expenses5.All of the above.

Financial Reporting Financial Accounting Financial Analysis
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Question added by Dasarathi Rath , Sr. Accountant , Al Luban Special Investment LLC
Date Posted: 2014/02/27
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Mahmoud El-Naggar
by Mahmoud El-Naggar , Senior Auditor , Hassan El-Serafi & Shafiq Ahmed Chartered Accountants

As the fixed asset will serve more than one year and generate revenue s for every coming year

Humza Shahid
by Humza Shahid , Finance Support officer , Akzonobel Pakistan (Formerly ICI Paints)

because when the business buy an asset its assume that it generate the revenue and there is some cost to generate the revenue if the depreciation wll not record in income statment then income will be overstated

 

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