Incidental costs

Hi Pranav,

What purchases are you talking about? Normal trading purchases or asset purchases. As far as ASSET is concerned, if it is required to get the asset in place and ready for use, then YES it is incidental and can be capitalised.

As far as normal trading purchases are concerned, amount you have paid to party shall only be accounted under 'Purchases'. Taxes paid shall also be included provided you are not going to set off the same. If you will charge the same from next customer and will adjust amt collected against amt payable, then taxes paid will be shown separately under 'Duties & Taxes' in 'Current Liabilities'.

Transportation costs are not incidental to such trading purchases. They are separately accounted under expense head.

i am concerned only about normal trading purchases.. thanks a lot... your reply has helped