Hello All,
I have two scenarios for a engg and construction company which builds buildings, plants etc for its clients.
Firstly it owns equipments and vehicles for construction business, which are maintained by a centralized stores depot. As and when a particular a project requires, these are loaned to them say for a period of 6 months or may be a year. If the projects are separate cost centres (to calculate whether each of the projects have made profit or loss for the company), how would the depreciation be treated?
if these projects were its own projects (like office building for its own regional office), how would the depreciation be treated as? Can this depreciation be capitalized in this case, treating it as an expenditure?
As far as operation expenses are concerned (like fuel, labour, maintenance) I understand they can be directly charged to the project and capitalized, is this correct?
Further to this, is it possible by accounting standards to charge the depreciation amount to a project directly and capitalize it, instead of charging it against P&L?
Please answer, thanks in advance. Sachin
CAclubindia
