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intrest on pre const. mach. loan

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Querist : Anonymous

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Querist : Anonymous (Querist)
20 May 2011 Machinery loan is taken in pre construction period in new under construction factory. How to post that interest in books of accounts of asessee?(partnership firm)
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U S Sharma

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U S Sharma (Expert)
20 May 2011 factory is not in existance but the firm is in existance on the date of loan availment, so usual treatment would go , the loan would go in liability side and interest would get debited in P.L account,
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CA PARAS BAFNA

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CA PARAS BAFNA (Expert)
20 May 2011 In my view Interest has to be Capitalised by Debiting the Machinery A/c and Crediting the Interest A/c till the machine is put to use.
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Pankaj Gandhi Jaiswal

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Pankaj Gandhi Jaiswal (Expert)
05 June 2011 Interest will be capitalized please refer two AS 10 is for Fixed Assets and other is for Borrowing cost
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