accounts

This query is : Resolved

E S S PRABHAKAR (Querist)
Follow

21 August 2009 DEAR SIR/S

I HAVE AN DOUBT REG.THE FOLLOWING KINDLY CLARIFY THE SAME:

IF A VEHICLE PURCHASED FOR 5 LAKHS(ASSUMED) AND GONE FOR FINANCE FOR 5 LAKHS AND 2 LAKHS INT.FOR 36 MONTHS. WHILE PASSING THE ENTRY SHALL I CAPTLAISED THE INTERST TO VEHICLE ACCOUNT ? i.e VEHICLE A/C DR 7.00LAKHS TO FINANCE COMPANY A/C 7.00LAKHS THEN ,AS PER THE ABOVE ENTRY IAM ELIGIBEL TO CLAIM DEPRECIATION ON 7.00LAKHS ISNT NOT?

OR SHALL I SEPARATE THE INT.PART?AND TO CLAIM FIN.CHGS. FOR 12 MONTHS .

PL.CLARIFY

THANKS & REGARDS

PRABHAKAR.

Ratan Sharma

Ratan Sharma (Expert)
Follow

21 August 2009 No,
Interest paid has to be debited to revenue expenditure account. It can not be capitalised to asset account accordingly no depreciation can be claimed on interest payable.

CA KAMLESH INDERCHAND JAIN

CA KAMLESH INDERCHAND JAIN (Expert)
Follow

21 August 2009 While Purchasing, Book Vehicle at Rs 5 Lacs & Claim Depreciation on Rs 5 Lacs. As & When Interest is paid account it through Profit & Loss A/c as it allowable expenditure as business expenditure. Charge Int for 12 Months to profit & Loss A/c

E S S PRABHAKAR

E S S PRABHAKAR (Querist)
Follow

21 August 2009 Thank you very much sir...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok