07 July 2009
There is one manufacturing unit in which flooring work was done for the very first time since the establishment.. Before the flooring was done there was barren land n there was no use of such space except for parking.After flooring work done on such space there was much utilization of it such as for storing material and running of hydra crane..the cost of Flooring amounts to Rs. 30 lacs.. Whether such flooring should be debited to profit and loss A/c or it should be capitalised to factory building...If any judgement is there , then plz provide for the same...
The flooring work is to be capitalised. firstly, its not of the nature of repair and it is a new construction and also enhances the utility of land and can be capitalised under the head Factory building as open stock yards are also part of factory building.I am not having any case reference immediately but later on i will communicate u.
CAclubindia
