Forums
Back
AS16
Accountancy
when a qualifying asset is purchased it takes 4 months of time to get ready for its use so when we purchased we incur some cost right now the cost that we incur is charged to respective asset acc. or p&l a/c? Video Details ------------- P1 - Accounting Standards - CA Inter AS 16 #2. Commencement of Capitalisation
Answers (4)
this would b wrt as2, added to cost till it's brought to the location & condition decided by the management as16 = intrest would not form part of the cost since less than 12month, if loan taken any wrt this asset QA = isnt purchased it's manufactured by the Co itself
Sushmita Chowdhury
this would b wrt as2, added to cost till it's brought to the location & condition decided by the management as16 = intrest would not form part of the cost since less than 12month, if loan taken any wrt this asset QA = isnt purchased it's manufactured by the Co itself
means the cost that we incur now is added to that respective asset and not to be charged to p&l right..
is asset manufactured by the Co or is it purchased ? if asset manufactured by the Co then all those cost incurred to bring the asset to its present location and condition, only those cost will be capitalised (put to use don't matter) any cost incurred after that will be pl if the asset is purchased then only pur price will be cost other cost pl
Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset should be capitalized as part of the cost of that asset. So if 4 months is considered to be a substantial period of time (generally less than 12 months is not considered to be substantial), then you can capitalise.
