According to as 16, if an asset is ready for its intended use t the time of its aquisition, it is ineligible for capitalization. Say a truck requires a waiting period of 1.5 years. So should we disallow capitalization of interest on the ground that it would be ready for its intended use t the time of its aquisition?
Menu
AS 16
Replies (1)
I believe that if the amount has been borrowed specifically for purchase of the truck and the asset is not ready for its intended use on day one. It is in the process of making and becomes ready for use of the purchaser only after a period of 1.5 years. So I think there is no bar on capitalisation of borrowing cost provided that the asset is an qualifying asset (pl also refer para 10,11 of AS 16)
Recent Topic
- AIS UTILITY
- NPS Premature withdrawl -Tier 1 Account
- Provident fund taxation
- ITR3 AY 26-27 Error in filling status
- Queries on TDS as per IT
- Capital Gains set off on Sale of Land if held for
- ITR Form for income from freelance consultancy
- Gst rate for HSN code 28530010
- Health Insurance
- India GST Mobile App
Related Topics
CAclubindia
