Purchase of Property

This query is : Resolved

Report Abuse Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

18 December 2010 Even the Interest Paid on Loan taken for the purchase of property should be capitalised?

Lovnish Gupta

Lovnish Gupta (Expert)
Follow

18 December 2010 It depends upon case to case. If the asset is ready to use at the time of purchase than it will be charged to revenue other wise we should see whether the asset in question meet the criteria of qualifying asset.
Qualifying Asset
1. Assets generally take 12 months or more for construction or condition to use.
2. Future economic benefits.

If asset is a qualifying asset than interest cost will be capitalized otherwise expense off.