05 February 2009
Are the companies forced to adopt this standard or is it optional ?
I mean if a particular borrowing cost qualify to be capitalized, can the company charge it to P&L A/c (thereby reducing the profit)? Or is it forced to capitalize it compulsorily (profit will increase then)?
05 February 2009
Companies are required to follow the applicable accounting standards. If not the reason,deviation and effect on the profit and loss a/c and b/s on the deviations must necessarily be included in the notes to the accounts.If the accounting standards are not followed it is violation of section 211 (3C) of the Companies Act,1956 thereby the accounts will be treated as not true and fair.
CAclubindia
