Capitalization of legal fees paid to acqiure a premise

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Nandini Rao (Querist)
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10 July 2011 Suppose a trust wishes to acquire premises in a posh locality. Ownership title of the seller is not clear. Accordingly, the trust appoints Legal Expert(Advocate/Solicitor) to determine the true owner of the property. Now, should the substantial fees paid to the legal expert be capitalized after resolving the matter & acquiring the property?

Further, what will be the accounting treatment for the substantial amount paid to the legal expert if the deal does not materialize & the trust changes its mind & does not move ahead to acquire the property?

U S Sharma

U S Sharma (Expert)
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10 July 2011 if property is taken then its professional fees and capitalize,
if not taken, then its revenue expenditure for business, or capital expenditure for non business

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