26 June 2016
A land has been purchased..and shown in books as inventory according to its business of buying and sale of property...the borrowing interest according to AS-2 cant be capitalised...
So according to rules the interest expenses would be taken to P&L account which results in huge net loss for company...
suggest any way to deal with it by not showing it as p&l expenses..!!!!!!!!!!!!!!!!!!!!
26 June 2016
Dear Ananya,
The question of capitalisation of borrowing cost does not arise since this is a question of stock and not fixed asset. you'll need to take it to p and l account. the said loss can be set off in next 8 years. what's the harm in that?!
26 June 2016
Harm is my current net profit goes to (-) 1 crore...which affects the image of comapany...so i was seeking to get an advice of anything through which i could change the accounting....!!!!!!
CAclubindia
