There is a company who purchased plant and machinery worth 100 lakhs . It is not a single machine say 5 to 8 machines worthing in total 100 lakhs. Now in order to make payment for the same company took a term loan of 100 lakh and thus paid the amount .mu confusion is
1.Bank charged processing charges for granting term loan Rs 25700.
Company has debited this expenditure as bank charges but dont u think this expense should be capitalized.?
Company has taken loan after purchasing the machines .It is not like that that company went to bank and told about its proposed intention to purchase the machines .The party from whom the machines are purchased has sold on the basis of credit worthiness and reputation of the company.
CAclubindia
