Very very urgent

Guest

should be capitalised...

CA.Sonia

professional

517 Points Joined January 2009

Why not as operative Expenses?

nidhi

student

58 Points Joined November 2009

it shld be capitalised because any expenditure incurred before putting an asset into use all shld be added to cost of aquisition

@ CA. $ahar$h @

Student

338 Points Joined September 2009

Hi Sonia,

Yaar whether interest should be capitalised or not depend upon asset to asset. in case of machinery on whome depriciation will be charged interest should be capitalised. but for land interest should not be capitalised. as for land u are never gonna charge depriciation and with interest its value will keep on increasing and you wont be able to prove the appropriation of interest over that as it wont be in purchase deed.

Better show it as preoperative expense till the date of incorporation of hospital and further depending on the nature of asset either capitalise or charge against reciepts as explained earlierFuther, Salaried paid before the incorporation of hospital should be preoperative expenses and after that should be charged to income and expenditure account.

Guest

Originally posted by : CA.Sonia
	Why not as operative Expenses?

respected ma'am, you are so senior to me and u have more experience and knowledge than me.....as I'm a pcc student...I have studied that according to AS-10....it should be capitalised...

@ CA. $ahar$h @

Student

338 Points Joined September 2009

yaar rohit as 10 has not talk about institutions which have been incorporated and loan taken prior to that.

Guest

Originally posted by : CA.Sonia

Why not as operative Expthanks batane ke liye

Guest

As per accounting standard on fixed assets , and a realted study of accounting standard of borrowing cost, i suggest to capitalise interest on borrowed amount on all item except land. As all the items of expenditure in under the same project, ie, building of hospital and realted machinery in there. Interest can be capitalise if work is not inturrpted and finised at a go. For interruption period , the interest should not be capitalize.

Guest

When you are incurring expenditure which you can't put into asset heads you can treat them as pre-operation expenses , like legal expenses for incorporation of a company, etc. But here the expense directly related to some assets. So why loose future depreciation benefit?

TAPASH

AUDIT EXECUTIVE

132 Points Joined March 2010

Here a join study of AS 10 and ACCOUNTING STANDARD FOR BORRWOING COST NEEDED as i feel. And mandi is correct as per me.

Guest

yes, mandi is correct why should we think only in one angle. upto my knowledge it is true. this is the question having combination of BORROWING COST AND FIXED ASSETS. and why shouldnt we think about future depreciation benefits.

Dhruva Hegde

Chartered Accountant

230 Points Joined April 2008

Sonia...

when you have taken loan for construction of hospital until it starts it's operation means commencing its business the amt whatever either principal or int you are supposed to capitalise the expenditure and There is no option to treat it as pre-operative expns.If you treat it as pre operative then you are allowed to take 20% of the whole expenditure under IT act later after 5 years there wont be any asset in your company.. So As per AS 10 You are supposed to treat it as BUILDING and claim depreciation & Salaries & other expns as pre operative epxns till it starts its bussiness......