A Company is constructing Water Community Systems in different areas and no project is completed yet.So whether all the expenses (related to project and administrative ) to be shown as Capital WIP or the administrative expenses to be transferred to P&L A/c.It is a private limited company and not yet taken certificate of commencement. Thanks & Regards, Ramesh Kr Verma
2 Replies
Max Payne
(employed)
(2574 Points)
Replied 04 September 2009
Normally we dont capitalise the administrative expenses. Take it to P&L. But it is acceptable to capitalise the same if there are enduring benefits of the administrative expenses.
(Test whether (a) a portion or the entire administrative expenses were incurred during the WIP Period FOR the project and (b) that the benefit of such administrative expense is available over the life of the asset . Capitalise that portion only)
Project expenses you take to CWIP.
Private companies are not required to obtain certificate of commencement from ROC.
Arjun Roy
(Chartered Accountant)
(158 Points)
Replied 05 September 2009
all expenses directly attributable to the project must b shown as cap wip - travellin, consultant fees / charges, power / fuel spent on project, etc..
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