I want know whether Demurrage charges incurred should be capitalised to the asset cost or it should be write off to the P/L Account. As these charges are something which relate to inefficiency of an organization rather to a handling charges which is described AS-10.
As per my view it should not be capitalised but I want to know a reference Para no of AS/ AS Interpretation, any guidance note or any other statutory requirement.
Praveen Kumar
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 | ||
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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. |
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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.
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