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According to IAS16
An item of property, plant and equipment should initially be recorded at cost. [IAS16.15] Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site
A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset.A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures.
Any capital expenditure done before the commencement of operation of specified business, then such expenditure is allowable as deduction under the income tax in5 equal annual installments subject to the fulfillment of different conditions given under the Income tax Act.
Following preliminary expenditure are eligible for deduction
Time and purpose of preliminary expenditure
Time & Purpose
Before commencement of business:To start a business
After commencement of business:For expansion of existing business
Who is Eligible to claim such deduction
Note: foreign company is not eligible for deduction even it is a resident in India
Note that this is allowable & is not compulsory. If the assessee wishes , it can charge these expenses, as and when they occur. However, to give a true picture of the operations of a company in any given year, these expenses are defrayed over a number of years (maximum-5 years, as per Indian law).
becuase it is expense I should paid it un the future, but I paid it in erlier time for the future so its mine and I can back if i was wanting.