Capitalisation of expenses - Salary

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Monil Shah (Querist)

16 May 2009 Ours is manufacturing company. A project is going on for developing the company's new building.

Now i wanted to confrim whether We can capitalise the salary of the person (Includes directors and other managemnt staff) visiting the above project.

If yes Whether it would be correct doing that?

Is their any accounting standard related to this issue?

jegannath G

jegannath G (Expert)

17 May 2009 AS 10 is the applicable accounting standard

as per the standard only direct expenses relating to the project can be capitalised

Since the interpretation is being withdrawn by the ICAI, only the AS 10 is applicable for capitalisation of expenses / fixed assets.

Hence salary cost of the project related employees can be capitalised

Any indirect salary cost ie., CFO , Finance department , HR Department salary cannot be capitalised

Monil Shah

Monil Shah (Querist)

18 May 2009 Whether the applicable accounting standard is AS-10 or As-26 intangible assest as our company is developing the buiding on it own and same can be considered as developing cost.

In one of my friends company salary cost of managament staff like MD, CFO and others were capitalised and auditors didnt raise any objection.

Is there any case law related to above matter.Please confirm

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