Treatment of Int Borrowed for Personal Assets
This query is : Resolved
24 August 2009
My friend is running a soleproprietorship concern for the past4 yrs. he has availed OD for the business purpose & housing loan for his aquiring a house. The interest on OD is debited to p&l account under finance charges & interest paid on housing loan Rs. 10lacs is debited to his capital account. Now he wants to reverse the interest portion debited to capital a/c by debiting/capitalizing house building. Is this correct treatment,Also is this int considered as cost of acquisition at the time of transfer of Building
24 August 2009
I dont agree. Interest on Housing loan should not be capitalized as it is normal interest so Dr to P&L is the right treatment.
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