capitalisation

when u are constructing a building all the expenses directly attributable to such construction shall be capitalised. hence all the expenses like cemnet,iron.labour charge shall be debited to building account.

Ya sudipto Sinha is rite!!! Expenses directly attributable for the construction of your fixed asset - building need to be capitallised.
And the expenses incurred in the nature that it is the major contribution for creation of asset also should be capitalised...

So justify your expenses in capital and revenue nature and account!!!

when u r constructing any building so u have to debit all expenses directly to building or u can debit

project cost_cement

Project cost_Iron

Project Cost_Labour

But all these should be capitalise in building cost

Mr. Amarpreet Singh

All the expenses relates to Building Construction should be capitalise and debit to Building A/c . U need not to go for separate heads e.g. cements, labour, iron etc.

After the time of purchase u can't use all the items at a time. So i my view the following entries may be passed:-

For capitalization u may go thru,AS-10 and AS-16.

1.At the time of purchase,

Stock a/c Dr.

To cash a/c

What ever u purchase it should be in stock.

2. At the time of using materials

Capital WIP-Buildings a/c Dr

To Stock A/c

Here in the above entry both items of capital and revenue nature will come. After the end of the project it transferred to their accounts

3. At the time of completion of the project,

Buildings a/c Dr

To Capital WIP-Buildings a/c

Note:- The items said in ur example if they provide additional capacity or production to the plant, then the said items are to be capitalized,other wise they are transferred to "repairs to Buildings" in the p &L a/c.

 I agree with whar navan has said. Still i have a different and alternative point of view.

Whenever the material is purchased or labour charges are paid, the entry can be done in the following manner

Capital WIP A/c Dr.                                                                        60,000

To Cash / Bank A/c                                                                                          60,000

Further, you can create cost centres whereby you can enter the details of the items purchased. Here you can show the purchased categorised in cement, steel, labour charges, etc..

 When any Building is under Construction then materials purchased & labour chgs paid for it should be debited to Either Assets In course of Construction A/c or Capital work in progress A/c . After completion of the construction a certificate to be obtained from the architect  along with the details of materials used in the construcion. Only the cost of material as certified by the architect to be capitalised in Building and the rest stock of material should remain in Capital work in progress.

Natuarally, all the expenses incurred for constructing Building will be   debited to "Building Account" and the Total Cost will be CAPITALISE.

While debiting you can put naration as suggested by Ankit.

For the sake of labour Law compliances, you can keep two Account viz Building Account - Material & Building Account - Labour. After Completion of the Building you can merge both the accounts through J / v