Helloe Everyone
There is query regarding AS 10
Whether groung rent and dumerage charges will be added to the cost of asset or not?
6 Replies
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 21 July 2014
Ground rent not allowed but demmuerage charges yes need to be capitalised.
Pooja Mundra
(Article Assistant)
(43 Points)
Replied 21 July 2014
IS der any legal background...for the same?
Saurabh Anokhchand Jain
(Chartered Accountant)
(1043 Points)
Replied 21 July 2014
AS 10 states that the cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Demurrage charges are charges in the nature of delayed clearing charges which are charges to be incurred to bring the asset to its working condition for intended use.
Thus it should be capitalized..
Pooja Mundra
(Article Assistant)
(43 Points)
Replied 22 July 2014
Is not it kind of finance charges ...?
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 22 July 2014
refer to 2nd para in reply by suarabh jain u will get ur ans and its not finance charges.
uttam pratap singh
(no)
(21 Points)
Replied 22 July 2014
Just like interest payable on tax is not a finance charge incurred ...same way demurage is not fc
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