what is machinary in a company ?



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is machinary an asset or capital ?

2 Answer(s)


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machinery is an asset to the company as it is used for the long term for the purpose of production of products

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it depends.

if your company is dealing in machinery (i.e. trading in machinery like generators etc) it is inventory or a Current Asset (not a Fixed Asset).

if your company has machinery for office or factory use then it is a Fixed Asset (also called a Tangible Non-Current Asset by IFRS).

If this machinery was provided by the owner of the business it is Fixed Asset and also Capital as well. Why? Because by nature it is a Fixed Asset and this Fixed Asset was provided by the owner of this business so its part of capital. In other words the accounting double-entry will be:

Dr. Machinery A/c
Cr. Capital A/c

If this Machinery was purchase from a supplier on cash or credit then accounting entry will be:

Dr. Machinery A/c
Cr. Supplier A/c (if purchased on credit) or
Cr. Cash/Bank (if payment made at purchase)

Hope this helps. If you need more info let me know.

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