Vishal Jadhav (CA Final Student) (38 Points)
08 July 2008Hi all....I have a query in respect to AS 26....As per AS 26 if the intangible is acquired by way of purchase, then cost + all expenses which are directly attributable to the asset is to be captalised. But if the expense is relating to lodging and boarding of a team which is installing a software (intangible asset), will this cost be added in the value of asset.
Thanking you in anticipation
SIDDHARTH LADHA
(SELF EMPLOYED)
(26 Points)
Replied 08 July 2008
As per AS 26 for the cost of intangible asset to be capitalised following condition should be satisfied,
1) The cost can be estimated reliably
2) future cash inflows can be ascertained
going by this logic the expenses in relation to boarding and lodging should not be capitalized as the future cash flows can't be ascertained
Vishal Jadhav
(CA Final Student)
(38 Points)
Replied 08 July 2008
Now take this:-
A company implement SAP and incurs consultancy expenses. It also incurs lodging and boarding exp for some consultants. Now how can u identify future cash inflow from SAP inplementation as well as from lodging and boarding cost? The logic is also equally correct if the expense incurred is smoothening the administration of the company. Give your views
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