Question

A company had replaced a semi-automatic part of a machine worth Rs. 25,000, which has doubled the output of the machine. How this cost of semi-automatic part is to be treated? Which ACCOUNTING STANDARD will be applied here​

Answer 1

Answer:

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Answer 2

Accounting standard 10 property plant and equipment will come here.

This accounting standard deals in as how the asset will be recognized under the books of accounts.

Any asset will be recognized only when

1. probable that the asset will generate a future economic benefit to the enterprise in the near future.

2. and its cost can be measured reliably.

and for the subsequent costs:-

1. for day to day basis ,recognize in the profit and loss account.

2.Replacement part , recognize only if the recognition criteria gets met and don't recognize in case of old part.