Dilip Gupta (CA) (29 Points)
31 March 2009Dear Friends,
A company has constructed a Road on Govt land outside his factory premises for easy convyence of vehicle.
The Question here is whether cost of construction of Road can be capitalized or not.
If u will provide any supporting section or law or rulling if available.
gourav
(student)
(113 Points)
Replied 31 March 2009
in my view cost of such road can not be capitalised because one can capitalise any expeniture in only following cases :
1. As a fixed asset
2. As intengible asset
3. deffered (which is not permited after AS-26)
Because such road is not satisfing the criteria of being fixed asset (AS-10) or intengible asset(AS-26) because control is one of the condition in both the cases hence it can not be capitalised.
plz give your views......
gourav
(student)
(113 Points)
Replied 02 April 2009
i have clearified above problem with a professional. As per his view this road can be capiralised as intengible asset (right to use) as per AS-26 because control includes joint control also........
CAclubindia
