Capitalisation of expenses

Snehal Kamath (articled student) (24 Points)

07 December 2012  

 

A Company has taken a Building on Rent and started reconstruction works to convert it in to a hospital.

Building Rent per month is Rs.15.00 lacs.

The normal construction period is approximately 6 months. But because of the internal disputes between the directors, the project was delayed by 14 months. Rent paid during the said 20 months is Rs.3.00crores.

Company wants to capitalize the entire Rent. Can it capitalise the expense?