capitalisation of int.on loan

A/c entries 1053 views 6 replies
User Avatar

accounts
71 Points Joined November 2008

 

DEAR SIR/S

I HAVE AN DOUBT REG.THE FOLLOWING KINDLY CLARIFY THE SAME:

IF A VEHICLE PURCHASED FOR 5 LAKHS(ASSUMED) AND GONE FOR FINANCE FOR 5 LAKHS AND 2 LAKHS INT.FOR 36 MONTHS. WHILE PASSING THE ENTRY SHALL I CAPTLAISED THE INTERST TO VEHICLE ACCOUNT ? i.e VEHICLE A/C DR 7.00LAKHS  TO FINANCE COMPANY A/C 7.00LAKHS  THEN ,AS PER THE ABOVE ENTRY IAM ELIGIBEL TO CLAIM DEPRECIATION ON 7.00LAKHS ISNT NOT?

OR SHALL I SEPARATE THE INT.PART?AND TO CLAIM FIN.CHGS. FOR 12 MONTHS .

PL.CLARIFY

THANKS & REGARDS

PRABHAKAR.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reply Share Follow
On 21 August 2009 at 10:24 Report
Replies (6)
User Avatar

Student
30 Points Joined September 2008

Interest or Financial charges on anky kind of Fixed Assets cannot be classified

as per Income Tax and Accounting Principles & Practice.

Reply
On 21 August 2009 at 10:57
User Avatar

Chief Accountant
2828 Points Joined December 2007

Interest can not be capitalised but u can claim it as expenses.

u can claim depreciation on cost.

Reply
On 21 August 2009 at 11:34
User Avatar

CA. Final
455 Points Joined October 2007
Originally posted by : @ m!t B. "keep $m!l!ng"
" Interest can not be capitalised but u can claim it as expenses.
u can claim depreciation on cost.		 "


 

what about AS 16 in this regard.......???

Reply
On 29 August 2009 at 19:24
User Avatar

Article
26 Points Joined July 2009

as 16 does not allow interest capitalization on assets which are ready 2 be put 2 use. Theese assets are not considered as qualifying assets.

Reply
On 30 August 2009 at 00:49
User Avatar

none
47 Points Joined August 2007

At the time of Buying Vehicle

Dr Vehicle A/c - 5 lakh

Cr Vendor Loan A/c - 5 Lakh

When EMI is paid

Dr Vendor A/c - With the priciple amount

Dr Interest A/c - With the interest amount

Cr Bank A/c- With the Total EMI amount

Suggestions,Criticisms and advices Welcome... 

Reply
On 30 August 2009 at 00:58
User Avatar

MANAGER ACCOUNTS
43 Points Joined April 2009

 

Interest can be claimed as expenses and  the Interest Liability  you have to  ACCOUNT as Prepaid Financial Charges

 

Reply
On 03 September 2009 at 01:49


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading