Capitalization of legal fees paid to acqiure a premise
This query is : Resolved
Nandini Rao
(Querist)
10 July 2011
Suppose a trust wishes to acquire premises in a posh locality. Ownership title of the seller is not clear. Accordingly, the trust appoints Legal Expert(Advocate/Solicitor) to determine the true owner of the property. Now, should the substantial fees paid to the legal expert be capitalized after resolving the matter & acquiring the property?
Further, what will be the accounting treatment for the substantial amount paid to the legal expert if the deal does not materialize & the trust changes its mind & does not move ahead to acquire the property?
Further, what will be the accounting treatment for the substantial amount paid to the legal expert if the deal does not materialize & the trust changes its mind & does not move ahead to acquire the property?
U S Sharma
(Expert)
10 July 2011
if property is taken then its professional fees and capitalize,
if not taken, then its revenue expenditure for business, or capital expenditure for non business
if not taken, then its revenue expenditure for business, or capital expenditure for non business
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