How to capitalize interest on sb / fd

Ravishankar K (Accountant) (461 Points)

27 May 2012  

Dear Friends during the last FY we had made entries like

 

Bank Ac Dr 25000

interest ac Cr 25000

 

and FD Ac Dr. 25000

Interst AC Cr 25000

 

so in this years Income Expenditure statement we showed income of Rs.50000/- earned as interest from Savings and Fixed Deposits, but our head office has asked us to capitalize the revenue earned. What exactly means by capitalization and what entry should i pass now for the whole year i.e journal entry.

 

Someone please advise.