Regarding capitalization
This query is : Resolved
23 January 2011
I have a question. If one company purchases any agriculture land and capitalized it in its books and after sometimes of purchase like 1 or 2 years company wants to commense any activity on land and on it pays some CLU charges to the government as for commensement of activity. Should company capitalize the same or expensed the same ? Pls clarify !
Manoj Sachdeva
(Expert)
23 January 2011
Since the amount paid as conversion charges will be enhancing the value of the asset they need to be capitaliseed otherwise if the amount is written off in the books the ent profit realised at the time of sale wil not give a true and fair view of the profit.
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