Interest part in emi as cost or expenses

This query is : Resolved

Prateek Jain (Querist)
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14 February 2013 Hello everyone,

I have a query that we had purchased a land from Gujarat Industrial Development Corporation(GIDC). Payment is to be made in quaterly instalments. Now I need to know that whether the interest part in EMI paid to GIDC is added to the cost of land or should be taken as expense.

There is no construction done on the land.
Pls guide me on this query

Prateek Jain

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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14 February 2013 Interest component should be treated as an expense.

Prateek Jain

Prateek Jain (Querist)
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14 February 2013 Thank you sir,

And one more thing, Land development cost will be added to the cost of land or will it be treated as and expense in year in which it is incurred.??

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CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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15 February 2013 Development costs will be added to the cost of land.

Prateek Jain

Prateek Jain (Querist)
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16 February 2013 Thank u...