MCA has released General Circular No. 35/2014 dated August 27, 2014. It is a Clarification regarding AS-10 - Capitalization of Cost.
AS-10 and AS-16 prescribes principles of capitalization of various costs on the underlying principle that expenditure should be capitalized as form a part of the cost of fixed assets which increase the worth of assets. Cost incurred during the extended delay in commencement of commercial production after the plant is otherwise ready, but which does not increase the worth of assets, should not be capitalized.
AS 16 guides with regard to part capitalization, where some units of a project are complete. Costs should be capitalized in relation to that part which is ready for commercial production.
Further clarified that AS-1 and AS- are applicable irrespective of whether the power projects are "Cost-Plus Projects" or "Competitive-Bid Projects".
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