As 16 capitalisation of preclosure chrges

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brijmohanpareek (Querist)
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05 August 2011 In Connection with AS 16 kindly advise on Capitalisation of Loan preclosure charges and Overdue interest charged by Bank on Delayed Payment of installment.

CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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05 August 2011 preclosure charges can be capitalised as it is BC directly attirbutable to borrowing provided asset is Qualified asset.
Penal interest (i believe and not sure )can not be capitalised.

brijmohanpareek

brijmohanpareek (Querist)
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05 August 2011 Thanks Vikas but
1.)will your answer be same in case we have preclosed a loan and gone for other loan on the same Project ?

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CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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05 August 2011 Ans is No.
where loan is replaced with other loan then NO.

CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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05 August 2011 Ans is No.
where loan is replaced with other loan then NO.