I HAVE AN DOUBT REG.THE FOLLOWING KINDLY CLARIFY THE SAME:
IF A VEHICLE PURCHASED FOR 5 LAKHS(ASSUMED) AND GONE FOR FINANCE FOR 5 LAKHS AND 2 LAKHS INT.FOR 36 MONTHS. WHILE PASSING THE ENTRY SHALL I CAPTLAISED THE INTERST TO VEHICLE ACCOUNT ? i.e VEHICLE A/C DR 7.00LAKHS TO FINANCE COMPANY A/C 7.00LAKHS THEN ,AS PER THE ABOVE ENTRY IAM ELIGIBEL TO CLAIM DEPRECIATION ON 7.00LAKHS ISNT NOT?
OR SHALL I SEPARATE THE INT.PART?AND TO CLAIM FIN.CHGS. FOR 12 MONTHS .
21 August 2009
No, Interest paid has to be debited to revenue expenditure account. It can not be capitalised to asset account accordingly no depreciation can be claimed on interest payable.
21 August 2009
While Purchasing, Book Vehicle at Rs 5 Lacs & Claim Depreciation on Rs 5 Lacs. As & When Interest is paid account it through Profit & Loss A/c as it allowable expenditure as business expenditure. Charge Int for 12 Months to profit & Loss A/c
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