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    Question

    TechCo upgraded its machinery in Year 3 of its 5-year

    life, extending useful life by 3 years. WDV before upgrade is ₹60 lakh; upgrade costs ₹15 lakh. Disclosures under Ind AS 16 require what accounting treatment?
    A Expense ₹15 lakh immediately Correct Answer Incorrect Answer
    B Add ₹15 lakh to WDV and amortize over revised life Correct Answer Incorrect Answer
    C Add ₹15 lakh but continue over original remaining life Correct Answer Incorrect Answer
    D Treat ₹15 lakh as maintenance Correct Answer Incorrect Answer
    E Capitalize ₹15 lakh and leave original life unchanged Correct Answer Incorrect Answer

    Solution

    Under Ind AS 16, enhancements extending service life are capitalized as part of the asset. The total revised WDV (₹75 lakh) is depreciated over remaining 5 years (original + extension).

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