CONSTRUCTION OF ASSETS
This query is : Resolved
AJAY SHARMA
(Querist)
20 April 2021
Respected Members, there is a doubt regarding capitalization of Expenses while construct an asset for selling purpose.
A co getting contract to construct an asset. which will be taken 3 to 4 years to complete. now my questions are,
1. Retention portion as per agreements where it should be shown. Current liabilities or any separate provisions should be created?
2. If any Professional services are given related to construction of above assets, then whether it should be capitalized or not.
3. IT would be under WIP as a stock or asset??
Please Help me in this matter.
A co getting contract to construct an asset. which will be taken 3 to 4 years to complete. now my questions are,
1. Retention portion as per agreements where it should be shown. Current liabilities or any separate provisions should be created?
2. If any Professional services are given related to construction of above assets, then whether it should be capitalized or not.
3. IT would be under WIP as a stock or asset??
Please Help me in this matter.
CA R SEETHARAMAN
(Expert)
21 April 2021
1 Show it as current liability.
2 It should be capitalised to the asset under construction.
3 It would be WIP as stock.
2 It should be capitalised to the asset under construction.
3 It would be WIP as stock.
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