banner_ad

Cost of Purchase of asset

453 views 5 replies

Interest borrowed for acquisition of asset is capitalised .

Interest on deferred payment for acquistion of capital asset -allowed as an expense

Please explain .

Replies (5)

To be frank, deferred payments are accruals during putchases and not capitalosed. Depreciation is allowed but not the whole ppe. 

Please correct my understanding if wrong

Interest borrowed for acquisition of asset is capitalized .( Capitalized - before asset put to use)

 Interest on deferred payment for acquisition of capital asset -allowed as an expense  (Expensed- after Asset put to use)

 

Deferred payment means delayed payment of interest to the bank right? Dont do that many times cause you could be facing hard capital rationing. Anyways, as long as there is no halt, you can capitalise it even if it is deferred.

Deffered payment is also a part of asset cost.

That is correct by you @ sabyasachi if the company borrows 100 for project and worked for 6 months

proprty 90

building 80

leaese30

capitalised interest 100*10%*6/12= 5 

total ppe/assets=205


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 May 2026
Audit clerk

mgirt & co

Bengaluru

CA Inter

View Details
Company
11 May 2026
Post office

Post office

Anakapalle

Others

View Details
Company
21 May 2026
Associate

PWC

Kolkata

CA

View Details
Company
26 May 2026
CA / MBA (Finance) / CMA / M.Com (Finance)

Sri Aurobindo Gnostic Centre of Education

New Delhi

CA

View Details
Company
22 May 2026
Audit assistant

Displayandbeyond

Mumbai

CA

View Details
Company
Featured 28 May 2026
SEMI QUALIFIED/ CA DROPOUTS/ ARTICLES

T R SOOD & CO

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 28 May 2026
Accounts, Audit & Compliance Executive

Shyam Joshi & Associates

Pune

B.Com

View Details
Company
11 May 2026
AUDIT INTERN

M/S K.K.KHANNA AND COMPANY

Noida

CA Foundation

View Details