10 January 2009
Dear Sir, Guidance note on treatment of expenditure during construction period has been withdrawn. My question is when an existing firm set up a new industrial undertaking then during construction period all the expenditure shall be capitalised. For Borrowing costs there is a seperate Accounting Standard AS-16, But what about the treatment of other expenses like Security Service , Electricity Expenses as the Electricity connection is obtained at the site, Supervisory Charges etc , Under which Accouting Standard these expenses are covered. Previously these expenses were allocated to the cost of fixed assets as per the Guidance Note what is the procedure now please advice
06 April 2009
preliminary expenditure on formation of company to be written off. prelimanary project expenditure like survey & investigation,feasibility report etc as per AS-26. Other expenditure to be transferred to incidental expenditure during construction and be capitalized profit and loss a/c has to be prepared in the light of withdrawal of guidance note. now, a profit and loss a/c, a statment of incidental expenditure during construction to pending capitaliazation to be prepared. AS-26 is very important in this respect. rest you can give into accounting policies and notes on accounts.
CAclubindia
