Entity A has an existing freehold factory property, which it intends to knock down and redevelop....

 

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Entity A has an existing freehold factory property, which it intends to knock down and redevelop. During the redevelopment period the company will move its production facilities to another (temporary) site. The following incremental costs will be incurred: 1. Setup costs of Rs.5,00,000 to install machinery in the new location. 2. Rent of Rs.15,00,000 3. Removal costs of Rs.3,00,000 to transport the machinery from the old location to the temporary location. Can these costs be capitalised into the cost of the new building? Entity A has an existing freehold factory property, which it intends to knock down and redevelop. During the redevelopment period the company will move its production facilities to another (temporary) site. The following incremental costs will be incurred: 1. Setup costs of Rs.5,00,000 to install machinery in the new location. 2. Rent of Rs.15,00,000 3. Removal costs of Rs.3,00,000 to transport the machinery from the old location to the temporary location. Can these costs be capitalised into the cost of the new building?

Answer rating: 100% (QA)

No these costs cannot be capitalised into the cost of the new building Capitalisation of costs ... View the full answer