I m doing stat audit in one of the big advertising co. while doing auditing i found query; for example ABC an advertising co. sales its hoarding disply to XYZ builder for invoice value rs.50,00,000/- in considartion ABC co received 10 flats of rs.5,00,000/- each and paid stap duties and registration fee of rs.8,00,000/-
BUT RS.8,00,000/- IS NOT TRACEABLE IN ANY BANK OF THE CO. THEN RS.8,00,000/- SHOULD BE CAPITALISED OR NOT ?
unless the amount is paid from the accounts, it can not be capitalized, ask for more details of this registration cost, whether paid by company or by XYZ builder. and finalize the same on the basis of their statement.
Then who has paid Stamp Duty?
If the stamp duty is paid by the XYZ builder, then there should be no question of considering the amount. If the amount is paid by the ABC company, then it has to be capitalised.
Generally Fixed Assets are recorded at Historical Cost.
Here Historical Cost in the hands of the Company is Rs. 50,00,000/-
In the above case if stamp duty is paid by ABC company then it should be capitalised by it otherwise not possible.
CAclubindia
