AS 10, demurrage charge
This query is : Resolved
16 August 2007
Whether can we capitalize demurrage charge to imported capital items ?
16 August 2007
Yes,
Cost incurred to bring the asset to present location includes Demurrage charges as it is incurred before bringing the asset to it's present location. i.e. factory.
Cost incurred to bring the asset to present location includes Demurrage charges as it is incurred before bringing the asset to it's present location. i.e. factory.
CA Manish Iyer
(Expert)
17 August 2007
As per para 20 of AS 10 states that the cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Demurrage charges are charges in the nature of delayed clearing charges which are charges to be incurred to bring the asset to its working condition for intended use.
It is a finance charge and should be expensed off immediately. No part of such charges should be capitalised.
I hope this would satisfy you.
Demurrage charges are charges in the nature of delayed clearing charges which are charges to be incurred to bring the asset to its working condition for intended use.
It is a finance charge and should be expensed off immediately. No part of such charges should be capitalised.
I hope this would satisfy you.
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