Skip to content

CA Intermediate · Advanced Accounting · AS 10 Property, Plant and Equipment

Sundaram Textiles Ltd. bought a machine from a Coimbatore supplier for ₹12,00,000 plus GST of ₹2,16,000, for which input tax credit is available. It paid ₹40,000 for transport to the factory, ₹60,000 for foundation work and ₹25,000 for trial runs, and incurred ₹30,000 on staff training for the machine. What is the cost of the machine to be capitalised under AS 10?

The machine is capitalised at ₹13,25,000. This is the purchase price of ₹12,00,000 plus transport, foundation and trial run costs. GST is left out because credit is available, and staff training costs are charged to profit and loss, not capitalised.

  1. A₹13,25,000Correct
  2. B₹13,55,000
  3. C₹15,41,000
  4. D₹12,00,000

Explanation

Cost = 12,00,000 purchase price + 40,000 transport + 60,000 foundation + 25,000 trial runs = ₹13,25,000. GST is excluded because input credit is available. Staff training is not a directly attributable cost and is expensed. Option ₹13,55,000 wrongly includes the training cost.

Did you get it right without looking?

One question tells you little. A timed set on AS 10 Property, Plant and Equipment shows your real accuracy, how long you take and where you lose marks.

Practise AS 10 Property, Plant and EquipmentFree diagnostic mock

More AS 10 Property, Plant and Equipment questions