Accounting Treatment

This query is : Resolved

Navin Agarwal (Querist)
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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.

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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07 June 2011 It will be capitalized

Navin Agarwal

Navin Agarwal (Querist)
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07 June 2011 SIR, I FORGOT TO MENTION THAT AND EXPENDITURE INCURRED ON 210MW OR 600MW COULD NOT BE USED IN 660MW PLANT.

Navin Agarwal

Navin Agarwal (Querist)
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07 June 2011 SIR, I FORGOT TO MENTION THAT AND EXPENDITURE INCURRED ON 210MW OR 600MW COULD NOT BE USED IN 660MW PLANT.

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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07 June 2011 It should be revenue expenditure because of the expenditure will not use full for 660 MW

Harsh Karan Singh

Harsh Karan Singh (Expert)
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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.

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