Capitalisation of Stamp Duty paid towards Loan obtained
This query is : Resolved
05 March 2009
A Machinery was purchased which is not a qualifying asset as per AS 16. A loan was obtained to purchase the machinery. While the loan was obtained, Stamp Duty Charges were incurred.
Pls clarify whether the Stamp Duty Paid for obtaining loan can be capitalised?
or
stamp duty charges can be treated as borrowing costs and accordingly charged to P&L Account as the machinery is not a qualifying asset?
Pls clarify whether the Stamp Duty Paid for obtaining loan can be capitalised?
or
stamp duty charges can be treated as borrowing costs and accordingly charged to P&L Account as the machinery is not a qualifying asset?
05 March 2009
You can capitalize
05 March 2009
yes u can capitalize
05 March 2009
As per AS 10, any costs directly attributable to bringing the asset to its working condition for its intented use, can only be capitalised.
And finance and borrowing costs (Ancillary costs such as Stamp Duty, Processing Charges, etc. are also included in the finance & borrowing cost )can be capitalised and included as an element of cost of Fixed Asset, provided the asset is qualifying asset under AS 16.
In my case, the asset is not a qualifying asset. How can i capitalise?
plz support your answer with proper supportings
As per AS 10, any costs directly attributable to bringing the asset to its working condition for its intented use, can only be capitalised.
And finance and borrowing costs (Ancillary costs such as Stamp Duty, Processing Charges, etc. are also included in the finance & borrowing cost )can be capitalised and included as an element of cost of Fixed Asset, provided the asset is qualifying asset under AS 16.
In my case, the asset is not a qualifying asset. How can i capitalise?
plz support your answer with proper supportings
09 March 2009
AS-16 covers any charges incurred to obtain loan.
AS-10 covers any charges incurred for owning the fixed asset.
both covers the stamp duty. now the question is whether the stamp duty is paid for owning the machinery or to obtaining the loan amount.
so if its for machinery than u can capitalize as per AS-10 and if its for obtaining the loan amount than it falls under AS -16 and debited to P&L A/C.
AS-10 covers any charges incurred for owning the fixed asset.
both covers the stamp duty. now the question is whether the stamp duty is paid for owning the machinery or to obtaining the loan amount.
so if its for machinery than u can capitalize as per AS-10 and if its for obtaining the loan amount than it falls under AS -16 and debited to P&L A/C.
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