Demurrage Charges accounting treatment?

demmurage charges is not an independent expenditure, it incurs with transportation / godown rent etc, and this is always accounted as clubbed with respective heads where from the original expense incurs. 

Originally posted by : U S Sharma
	demmurage charges is not an independent expenditure, it incurs with transportation / godown rent etc, and this is always accounted as clubbed with respective heads where from the original expense incurs.

did you mean it should not be capitalised, if so can you give any reference to this.??

all exps incured up to the premises/godwn/works, dr to related expenditure a/c in case of raw material to to inward freight a/c, in the case of fiexd assets dr to fixed asstets a/c or other case in concernd a/c

it willbe capitalised AS 2 STATES all the exp incurred to bring the asset to current position and location is 2 b capitalised , without y=this exp CUSTOMS wil not leave the goods

demurrage 

to  cash

stock

to demurrage

closing stock will go up

As per the guidance Not by ICAI, Demurrage and penalties are abnormal cost and are not part of the material cost. It is charged to Profit & Loss Account.