Whether Expenses on Fixed Assets always Capital Goods?

Last updated at April 16, 2024 by

Expenses on Initial Purchase of a Fixed Assets are Capital Goods
However, expenses later on on maintaining or repair of Fixed asset is not Capital Goods.it is either Inputs or Capital Goods
 

 

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Example 1

Suppose we Purchase a Truck for our factory

Is it Input, Capital good or Input Services?

View Answer

Example 2

Suppose after some months, its tyre gets punctured

We get it replaced by a mechanic with a new tyre

Will you put it in Truck A/c or Repair A/c

Is it Input, Capital good or Input Services?

View Answer

Example 3

Suppose we do not get tyre replaced

We repair and fix same tyre

Is it Input, Capital good or Input Services?

View Answer
 
Note
Sometimes, subsequent expenses can be Capital Goods also
Expenses which increase capacity of Fixed asset beyond previous level are capitalized (put in Fixed asset account)

Example 1

Suppose I am a Taxi Operator

I Purchase a Car for 500000 + GST in January

To reduce running cost of car, I got a CNG Fitted in Car at a cost of 30000+GST in Feb

Is it Input, Capital good or Input Services?

View Answer

Example 2

Suppose I am a Taxi Operator

I Purchase a Car for 500000 + GST in January

Later Car met with an accident and 300000+gst was charged on repair of car

Is it Input, Capital good or Input Services?

View Answer

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Transcript

Expense Bill of SERVICE GOODS Input Services Example Audit Fees Consultancy Fees Used for 1 Year Used for more than 1 year Inputs Capital Goods Example Purchase Stationary Example Machine Computer Fixed Assets PURCHASED REPAIRED Capital Goods Parts Changed Labour Charges Inputs Input Services

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.