07 June 2011
A power generating company incurred huge expenditure on technical feasibility, research, survey, design and DPR reports initially planning that they will set up 210 mw capacity plant then changed their plan to set 600mw and finally now company is setting 660mw plant. Whether expenditure incurred at the time when company planned for setting 210mw and 600mw plant should be capitalized or charged to revenue.
15 June 2011
The expenditure incurred on planning for setting up of plant etc can be capitalised except the expenditure specific to the two earlier capacities that cannot be utilised for 660MW capacity. So it is also to be seen whether we can bifurcate the expenditure already incurred. Because it seems a remote possibility that the entire expenditure spent on the research for earlier two capacitiy plannings is useless for 660MW capacity. This is in furtherance of the above mentioned opinion.
CAclubindia
