According to as 16, if an asset is ready for its intended use t the time of its aquisition, it is ineligible for capitalization. Say a truck requires a waiting period of 1.5 years. So should we disallow capitalization of interest on the ground that it would be ready for its intended use t the time of its aquisition?
1 Replies
gokul
(Accountant)
(126 Points)
Replied 17 April 2010
I believe that if the amount has been borrowed specifically for purchase of the truck and the asset is not ready for its intended use on day one. It is in the process of making and becomes ready for use of the purchaser only after a period of 1.5 years. So I think there is no bar on capitalisation of borrowing cost provided that the asset is an qualifying asset (pl also refer para 10,11 of AS 16)
Recent Topics
- Avoiding tax audit in case of intraday equity loss
- Form 3CEAB
- Form 3CEAA and Form 3CEAB
- DIR 3 Web KYC
- Can i declare LTCG income as business income if I
- Stock entry in new software
- I have an EMI collection shop, what is its SAC cod
- Making payment once in quarter possible under QRMP
- Master File Documentation related
- Applicability of 44AD needs clarification
Related Threads
CAclubindia
