Dhaval (student) (20 Points)
30 June 2009hello everyone...
i want to know how to treat bank loan processing cost which is incurred for purchasing a capital asset.
and specifically i want to know if the amount has not been utilised till year end but bank has already charged us full amount of charges.
thank you
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 30 June 2009
Hi Dhaval,
If it is assumed that the Loan is taken for business purpose, then Loan Processing charges are "Allowable Expenditures".
Simply debit that charges to P & L A/c.
Dhaval
(student)
(20 Points)
Replied 06 July 2009
| Originally posted by :Rajesh | ||
| " | That charges should be capitalized by adding in the cost as up to installation all expenses incurred over that assets are to be capitalized. | " |
Mr. Rajesh i appreciate you replied to my question.....even i agree with you tat it should be capitalised...but i have further question which i can explain it to you by giving an example....
E.g. i have acquired a loan of ruppees 1 crore for buying Machines... for which bank has charged me 5 lakhs as charges which i have already paid...now in case till year end i have utilised only 60 lakhs ruppees for buying 5 different machines..... further 20 lakhs for another 2 machines at some other date and 20 lakhs are still unutilised....then in this case how wil i apportion my 5 lakhs ruppees...my main weight is on apportionment of expense...i get confused with apportionment of expenses related to this unutilised money
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