6 Replies
Mihir Manohar
(CA Final - Article Assistant)
(474 Points)
Replied 05 October 2012
I think it is revenue since it is a usual happening in business. I am also not perfectly sure about this.....
ramcharan
(articled assistent)
(367 Points)
Replied 05 October 2012
It depends on nature of business of the organisation, if such thing happens freqently then revenue, but if it happends regularly then what is the need for yoiu to ask Qn, you would have reffered to previous happenings
If it is a newly established company then it becomes a matter of deciding it the company may think that it will jhappen in normal course of business then revenue orelse capital
See it all about how the management think it should be
Nikhil Gupta
(Student)
(49 Points)
Replied 05 October 2012
Well, since you said that the govt closed operations before, i am presuming that it was a running business.
If the business was close for a few years i.e. to say more than a year and the management expects that such type of thing may not happen again in the course of the business, it will be treated as capital or otherwise.
CA Lokesh Pokharna
(CA (Ahmedabad Bhilwara Chittorgarh))
(4128 Points)
Replied 05 October 2012
pls furnish full particulars of your case............
Hardik Lakhani
(-)
(77 Points)
Replied 06 October 2012
A company was doing a certain business, Government shut it down for several reasons.
The Supreme court allowed the business to continue on some conditions.
How do we treat the costs of implementing such conditions?
Actually looking for case laws if possible...
thanks a lot.
ramcharan
(articled assistent)
(367 Points)
Replied 08 October 2012
IF the court orders the company to close down the operations fully and then to start the business, the company may take it as capital if they truly beleave that it might not happen again in future. as i already said it become part of decition of the management, if you are in the position it dependts on how you look the situationand how you deal
If I was in that situation I will try to capitalise it if the situation will not arise again
I think in your given case it might not arise
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