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It's the second one Machinery a/c. Dr To cash a/c

lohita Prava

CA Final

★ 35

13-Jun-20 17:03

But, is first one not correct

Thread Starter

lithish kumar

CA Final

★ 3K+

13-Jun-20 17:49

Of wages or any other expense is done while the errection it is in considered the cost of machinery and not seperately e.g if price of mac hinery is 2000 and wages for errection are 100 the machinery will be of 2100 also further accounting such as depteciation is calculated on 2100

Nandini S

CA Foundation

★ 1K+

14-Jun-20 10:23

No u can't do that because Wages is an expense which occurred to bring machinery into use. It cannot be treated separately from the machinery just like in depriciation where we calculate the cost of the asset.

lohita Prava

CA Final

★ 35

14-Jun-20 10:30

All expenses incurred for installation of the capital asset and necessary for it to be put to use have to be capitalised, hence wages paid for erection have to be debited to the Machinery account

Sudha Reddy

CA Final

★ 20K+

15-Jun-20 09:25