Capitalization of Fixed Assets Journal Entry
Capitalization of Fixed Assets / N on Current Assets means that any cost incurred in the acquisition of assets will be added to the cost of assets rather than separately charged it as an expense. Examples are wages paid for the installation of machinery, additions to fixed assets, etc. Suppose, the company purchased machinery worth Rs. 500000 for Cash . After that, the company paid wages of Rs. 5000 for the installation and erection of plant & machinery. The following entry is recorded in the Books of Accounts of company as shown below: Plant & Machinery a/c 505000 ...