AS-26
This query is : Resolved
CA Ravi Sisodia
(Expert)
14 July 2010
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14 July 2010
I need a detailed understanding of which expenses can be considered as attributable towards asset creation,
Standard says selling & admin expenses to the extent directly attributable can be considered.
If there are two activities being carried out in an organisation
1. XYZ revenue activities &
2. IP creation
which expenses-Indirect costs can be attributed
I need a detailed understanding of which expenses can be considered as attributable towards asset creation,
Standard says selling & admin expenses to the extent directly attributable can be considered.
If there are two activities being carried out in an organisation
1. XYZ revenue activities &
2. IP creation
which expenses-Indirect costs can be attributed
19 July 2010
Hi Swarupa,
explanation for your query is as follows:
a) Entity XYZ has 2 activities normal revenue generating expenses and IP creation.
b) direct expenses include your Manpower expenses ( salaries & wages), direct machinery cost ( depreciation), any direct expenses items of revenue nature (materials required for generation), this i believe you could identify with the available data with the client.
c) indirect expenses include the following:
i) proportionate administration expenes like rent, power, other general expenses.
ii) propertionate marketing expenses like demo etc....
iii) proportionate interest expenses apportionate on a reasonable basis.
iv) expnses incurred for travel, and other.
you can apportion all the relavent and other indirect expenses to the project, provided you should have a reasonable basis for allocation of the said project.
explanation for your query is as follows:
a) Entity XYZ has 2 activities normal revenue generating expenses and IP creation.
b) direct expenses include your Manpower expenses ( salaries & wages), direct machinery cost ( depreciation), any direct expenses items of revenue nature (materials required for generation), this i believe you could identify with the available data with the client.
c) indirect expenses include the following:
i) proportionate administration expenes like rent, power, other general expenses.
ii) propertionate marketing expenses like demo etc....
iii) proportionate interest expenses apportionate on a reasonable basis.
iv) expnses incurred for travel, and other.
you can apportion all the relavent and other indirect expenses to the project, provided you should have a reasonable basis for allocation of the said project.
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