Capitalisation of expenses

Accounting Entries 630 views 1 replies
Dear All, A company is startinf a project in 2016. The company was incorporated in 2007 for this project only. Currently the company has one office inahmedabad while the project site is 400 Kms from the city in a SEZ area. Now the company has been incurring routine expenses for the office such as salary of employees, contribution to PF, vehicle charges, stationary and printing charges etc. The accountant of the company says to capitalise the same. Now as an auditor, i asked that person to charge off those expenses to P&L account as those expenses are recurring in nature. Please somone guide me whether these expenses be charged off to revenue or should be capitalised? Also if the company capitalise the same then can it be alloded as depreciation as per the income tax act? Please advise urgently.
Replies (1)

Expenses prior to incorporation can be capitalised not before commencement of project.The expenses you have mentioned are revenue in nature as they have been incurred after incorporation.


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