Project Capitalisation

Before implementation of the project there may be two kinds of expenses. one- directly related to the project and two directly not related to the project. Expenses on travelling of employees to gather quotation is an indirect expendiure. It will not be capitalised. It should be debited to Pre- operative expenses. This will be debited in P & L A/c in the year of Commercial production. The amount may be debited in one year or may be amortised in next 5 years keeping in mind the total expenses.