Very very urgent

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.

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?

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

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.

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......

The interest incurred upto the date of asset put into workable conditionsshould be capitalized...and expenses(interest)  incurred thereafter should be treated as operating expenses bcoz as the asset is already ready and its contribution no more increase the asset capacity, and coming to salaries it should be treated as pre-operative expenses and should be shown seperately on asset side seperately...

SHOULD BE CAPITALISED