Expense as Asset

How to determine whether an expense is an asset or not? When you receive an invoice that shows that the company has purchased a tool or something, what makes you think this thing is an asset or it's an expense. Is it the price of it or what?

Questions by m_adel87

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sudhi0381

  • Sep 21st, 2010
 

The amount spent on acqusition of an asset is Expenditure and not as Expense. The nature of expenditure, the benifit of which will be lost for more than an year and the expenditure would be for purchase of an asset which will be used in enhanced production and not for resale.

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The expenses can only be capitalised in the following circumstances:
1. It must be related with the asset.
2. It must be essential to make the asset in working condition.
3. It must be above the capitalisation limit as per the prescribed policies.

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vijay saxena

  • Nov 8th, 2014
 

expenses who is spend on assets to increase the life of assets that type of expenses called capitalistic expenses and this expenses are reward as more than one year

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vinod kumar reddy

  • Nov 15th, 2018
 

The expenses are of two of two types
capital expenses
revenue expenses

The expenses which increases the earning capacity of asset are called capital expenses and it should be added to fixed asset cost.

The expenses used for maintenance of asset in a regular intervals of time and not increases the earning capacity of asset then it is revenue expense.

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