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Capitalisation of building

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This query is : Resolved

kaushik (Querist)

18 September 2014 Hello every one,
my query is that, one company goes on gives advances to the builder for construction of building it has purchased the same from that builder and sale deed was executed for 1.6C(as semi finished) but construction agreement was for 3.8C(3.72+ST+Vat). Company goes on giving advances to the builder. please suggest how to capitalise the advances given to builder. And also relevant date for calculation of depreciation under companies act,1956.

Nikhil Kaushik

Nikhil Kaushik (Expert)

18 September 2014 the same way you capitalized earlier payments made to the builder. depreciation should be computed only from the day building was put to use.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

18 September 2014 No it can not be capitalised till it is fully completed. All the payments should be shown under the head Capital Work-In-Progress. When its fully completed only then it should be capitalized. Deprecitaion calculation will start from the date when its put to use.

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