Booking of Expenditure in the books of accounts

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anil rana (Querist)

08 February 2009 if a company dig a pond for handling of ash what should be treatment of this expenditure wether it should be capitalized or charged to revenue. huge amount is involved.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

08 February 2009 Can elaborate more on the question such as nature of business, amount of expenditure, reason for expenditure?

anil rana

anil rana (Querist)

10 February 2009 Nature of Business: Thermal Power Plant
Amount involved: Rs. 4.00 crores appox.
Reasons for expenditur: for handling the ash arises out of coal based boilers. This pound will handle the ash for five to seven years.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

10 February 2009 Yes.
The amount should be capitalized.

anil rana

anil rana (Querist)

11 February 2009 Thankyou Sir, Kindly also confirm whether we should amortize it in its useful life or any other method for charging the amount to expenditure every year.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

12 February 2009 In its determined useful life.

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