X ltd has purchased Air Conditioner. For the installation of That AC they have rented a ladder ond paid rental charges of say Rs.600. Whether this charge of Rs.600 can be capitalised? and also say the related provisions in the IT Act.
04 January 2013
As per AS-6 any expenses incurred to bring the asset to it's present condition and location shall be added to the cost. In this case since the ladder was necessary to bring the AC to its present condition (i.e working condition). Hence it shall be added to the cost of AC. However the rental charges subsequent to the installation shall not be capitalised and shall be charged to P&L.
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