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Detention Fee for Fixed Asset

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Mohanraj J

1238 Points Posted on 08 October 2020

Dear Friends,
Shall we capitalized Detention Fee for Fixed Assets?

Replies (2)

Quick Summary

This discussion explores whether detention fees incurred for fixed assets should be capitalised. The consensus suggests that these fees should be capitalised as part of the fixed asset's initial recognition, rather than expensed. This approach prevents overstating expenses by avoiding the double-counting of depreciation and distribution costs against profits.

yasaswi gomes

My grammar is 💯 good I

7306 Points Posted on 08 October 2020

Yes it is capitalised

Fixed Asset dr.

Bank Cr.

This is initial recognition. No need to present it in the income statement because it will overstate expenses (can’t charge depreciation/amortisation +distribution exp. to profits twice)according to me not unless AS 10 suggests otherwise.