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A CONSTRUCTION IS GOING FOR BUILDING OWN BY A LTD COMPANY

CAN WE SHOW CEMENT PURCHASE FOR BUILDING CONSTRUCTION AS A FIX ASSET

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Varun.T.K (CA Final, CS Executive) (365 Points)
Replied 19 May 2010

All the direct expenses connected with the construction of a Self-owned assets are eligible to be capitalised.

The As-10 follows as under:

"In arriving at the gross book value of self-constructed fixed assets,
the same principles apply as those described in paragraphs 9.1 to 9.5. Included
in the gross book value are costs of construction that relate directly to the
specific asset and costs that are attributable to the construction activity in
general and can be allocated to the specific asset. Any internal profits are
eliminated in arriving at such costs".

Thus the cost of cement can be capitalised. The work of a building not yet completed, should be taken as capital WIP and only after the same has been completed, they are eligible for depreciation.