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Relocation expenses on major expansion
There is a major plant which is to be setup which is not possible without moving relocating part of the current plant. Essentially the plant is reorganised in order to properly accomodate the new plant. Can the costs incurred on relocating and reinstalling the existing machinery be capitalised to the new project as per IndAS 16
Replies (5)
Yes it can be capitalised
| Originally posted by : Nitin Bhuta | ||
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Yes it can be capitalised |
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Can you provide basis for it.
Because para 20 of IndAS states relocation expenses cannot be capitalised
Normal relocation expenses can't be capitalised but these expenses need to be incurred for establishing new plant thus it can capitalised as part of anciliary cost to establish new plant for carrying out business activities of the enterprise smoothly and effectively.
am not sure of the new standards but two years back we had faced same situation ,company named ujala had shifted the plant,then we were internal auditors so we suggested them to go on for capitalisation but end y
people advised them to go for half capitalisation and half revenue
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