Capitalisation of interest
This query is : Resolved
20 December 2010
Dear All,
There is a commercial building consisting of 10 floors of which first 4 floors have been constructed and ready to use/sale.
The client has taken a loan for the said assets.
My question is, whether interest on said loan should be capitalized in full or there should be a segregation as regard to the completed floors. whether completed floors should be regarded as Independent assets?
If it is so then the interest should not be capitalised in full and only for remaining 6 floors should be capitalised As per As-16 read all together with As-10.
There is a commercial building consisting of 10 floors of which first 4 floors have been constructed and ready to use/sale.
The client has taken a loan for the said assets.
My question is, whether interest on said loan should be capitalized in full or there should be a segregation as regard to the completed floors. whether completed floors should be regarded as Independent assets?
If it is so then the interest should not be capitalised in full and only for remaining 6 floors should be capitalised As per As-16 read all together with As-10.
21 December 2010
Sir there is big difference between use and sale. If construction is for sale, As 16 will not apply at all.
In case for self use and capitalization as per AS 16 you can capitalize the interest on copmlete part and incoplete part as CWIP
In case for self use and capitalization as per AS 16 you can capitalize the interest on copmlete part and incoplete part as CWIP
Message likes :
1 times
CA. R. B. SAH
(Expert)
22 December 2010
bhagat sir is right.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- EPF ECR NEW FILE SEP 17TH 2026
- Capital Gail Exemption Certificate
- Oct 2025 Invoices
- Import of Software Service.
- SECTION 393(3) TAX ON CASH WITHDRAWAL
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- Under marginal scheme
- Capitalgain tax purposes for valuation report compulsory
- GST on Renting godown to KFCSC for Storage of Raagi
- GST Audit whether Govt Companies are exempt?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
