Dear Friends during the last FY we had made entries like
Bank Ac Dr 25000
interest ac Cr 25000
and FD Ac Dr. 25000
Interst AC Cr 25000
so in this years Income Expenditure statement we showed income of Rs.50000/- earned as interest from Savings and Fixed Deposits, but our head office has asked us to capitalize the revenue earned. What exactly means by capitalization and what entry should i pass now for the whole year i.e journal entry.
Someone please advise.
Capitalise means including it in the value of asset concerned. It seems your HO wants to include interest earned to FD account,however I have no idea how they want to capitalise savings account. I dont think that treatment will be correct. Let more knowledged members also comment for arriving at a conclusion.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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