IndigoLearn

Forums

Capital and Revenue

If a petrol car is replaced with diesel engine for better economies. Let us say, Cost of petrol car = 5,00,000 Cost of diesel engine = 2,00,000 Now as usual we capitalise the cost of diesel engine to the car But if we sell the petrol engine which is removed the proceeds of such petrol engine how should we account for?? Whether it should be reduced from cost of diesel engine ?? Or The proceeds of petrol engine is recognised in p&l a/c as non-operating revenue?? Please clarify this for me...


VIJAYA SARADHI MAGANTI

VIJAYA SARADHI MAGANTI

CA Inter

850

25-Aug-20

110

Answers (5)

Best Answer

The proceeds of petrol engine is recognized in P&L A/c as non-operating revenue received on sale of an old engine. Purchasing a replacement engine for a vehicle is an asset improvement or capital expenditure. So it should be capitalized.


Madhuri Veluri

Madhuri Veluri

CA Inter

2K+

25-Aug-20

Mam!! How should we understand the point in the image below please clarify mam...

IMG-20200825-WA0000~2.jpeg

Thread Starter

VIJAYA SARADHI MAGANTI

VIJAYA SARADHI MAGANTI

CA Inter

850

26-Aug-20

The statement is incorrect. Old typewriter will be derecognized and new one will be fully taken as capital expenditure.


Madhuri Veluri

Madhuri Veluri

CA Inter

2K+

26-Aug-20

ACCA Webinar
BLR STUDENTS MEET
CBE Students meet
Meet Rajyalakshmi
Testimonials CA Inter May'22
Live Interview | AIR 1 & 2
ACCA Launch
CLAW Inter - Live H + E
Scholarship
Nov 22 exams
Quote for the Day
Past_Exams
Combo Discounts
Wishes to Rankers
CA Foundation Testimonials
Study Planner
Tally + Excel Free
Upgrade your Skills
FR + SFM
Refer
EMI