Treatment of iso certification charges

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2013 How to treat the testing and certification charges incurred for acquiring a government certificate (ISO) valid for 5 years? What head do they fall under in P&L a/c and B/S and should they be capitalized? Please quote relevant provisions or standards in support of the answer so that I can have a better idea. Thank you.

Rupesh Jain

Rupesh Jain (Expert)

08 June 2013 ISO EXP. FOR A PERIOD AS YOU ASK
ACCORDING TO ACCURAL ACCOUNTING SYSTEM
BIFRUCATE THE EXP IN PREPAID EXP. AND CURRENT PERIOD EXP.

Ganeshbabu K

Ganeshbabu K (Expert)

08 June 2013 It is one time payment and it can be expenced fully in the year in which it is incurred under professional consultancy charges

So charge full expence to profit and loss

we cannot treat it as prepaid expense

So as per my opinion certification charges can be expenced in the year in which it is incurred

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

08 June 2013 i) In the accounts debit the amount in 'ISO certification fee' and charge fully to profit and loss account.

ii) For income tax purpose full amount can be considered as 'revenue expenditure' as per the following decision.

ACIT V. Tirupathi Microtech (P) Ltd., 111 TTJ 149.

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