Depreciation, Provisions and Reserves

. Effect of any Addition or Extension to the Existing Asset An existing asset may require some additions or extensions for being suitable for operations. Such additions/extensions may or may not become an integral part of the asset. The amount incurred on such additions/extensions is capitalised and written off as depreciation over the life of the asset.

It is important to mention here that the amount so incurred is in addition to usual repair and maintenance expenses. AS- (Revised) mentions that Any addition or extension, which becomes an integral part of the existing asset should be depreciated over the useful life of that asset; The depreciation on such addition or extension may also be provided at the rate applied to the existing asset; Where an addition or extension retains a separate identity and is capable