Treatment of Compensation to Contractor post Capitalization of Project

If your following IndAS 16,

you can create a provision 

Legal fee expense Dr.- this is not directly attributable to PPE. 

To bank a/c

and create a provision 

Fixed asset- additional costs paid

To provision liability

then when you made the payment duly:

Provision liability a/c

To Bank a/c

this can be created as per IndAS 37.10(appendix) as you have a legal obligation. 

Thank you for your reply,

One more thing, what if we had not made any provision in the books regarding this. Plz guide in this also

Your correct because sometimes creating more provisions is restricted. So, 

Fixed Asset-> new costs

Legel expenses a/c

To bank a/c

no provision is required and also, how you treat the new carrying amount of the PPE depends upon your decision. You can make retrospective=changes and change all the balances or start depreciating the costs from current year. This treatment is ok because I don’t remember reading anything about this in PPE standard and if I do, I’ll reply back, Txs

Thank you so much sir.