K NANDINI (ARTICLE CLERK) (50 Points)
02 March 2012One of our client has lease hold land. Due to water stagnation / growing of bushes thereby paving way for breeding ground for poisonous snakes, mosquitoes etc., they want to around Rs.30 lakhs to level the ground.
Should we treat it as capital expenditure or revenue expenditure.
Please guide on this.
K.L.Nandhini
Article Assistant
email id : sreenandhini2003 @ yahoo.com
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 02 March 2012
As per AS10- Accoun ting for Fixed Assets, any expenditure incurred on a fixed asset that increases it's future benefits shall be capitalised & added to teh Cost of teh asset.
In Your case I think that the cost incurred on levelling the ground will be capitalised & added to the cost of the asset as it would increase the future benefits arsisng from the land.
CAclubindia
