CApitalisation of Expenditure

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Ishan Bedi (Querist)
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28 August 2008 A company for its expansion purpose inagurates its branch (Manufacturing Unit) in the mid F.Y. 07-08 in other state, where the company incurs all the revenue expenses (viz. Car Expenses, Electric Charges, Flat Rent, General Exp., Staff Welafre, Postage & Stamp, Printing & Stationery, Professional Fees, Telephone & Traveling Expenses) and till the F.Y. 2007-08 production is also not started. All the abovementioned Expenses are directly attributable to such Branch, Can these expenses be Capitalised and added to the cost of the Project, Can these be recognised as pre-operative expenses and added to the work in progress?

Ishan Bedi

Ishan Bedi (Querist)
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10 September 2008 Plz someone help on this topic

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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30 September 2008 If it is expansion of existing unit these can be charged off to revenue.

If it is a new identifiable project they can be treated as preoperative expenses of that project and capitalised to the fixed assets relating to that project if the expenditure are incurred for that purpose.

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