Depreciation caluculation

A/c entries 457 views 2 replies

Dear Sir,

We have taken the Term loan from bank in Nov-2011 for poultry farm. Poultry farm has fully completed in Dec-2012. This term loan has fully utilised for construction of sheds, machinery and purchase of birds,feed ony. In this period banker has debited the interest to my account. This interest (Nov-2011 to Dec-2012) i have capitalised to assets (Sheds & Machinery) Proportionately and remaining (Jan-2012-Mar-2013) interest debited to P&L Account.

Now my doubt is

1. This interest has to capitalise to asset or not ?

2. If interest capitalise to asset then depreciation will allowed or not ?

 

Replies (2)

Yes interest needs to be capitalized from teh date of taking the loan till the date the asset is put to use and depreciation can be claimed on it.

yes the interestest can be capitalized and depreciation can be claimed thereon.


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