ABC Limited, involved in constructing a high-speed rail project, has incurred ?80 crore in expenses, including ?40 crore in spectrum charges, ?10 crore in project promotion expenses, and ?30 crore in research and development costs up to March 31, 2022.
The company has capitalized these expenses as part of the project’s capital work in progress. The spectrum charges, essential for the project’s communication systems, have been treated as part of capital work in progress, while promotional expenses and research and development costs have also been capitalized.
The company’s approach to accounting for these expenditures raises questions, as it may lead to potential misstatements in financial reporting. The Expert Advisory Committee (EAC) has reviewed the accounting treatment and provided detailed guidance based on relevant accounting standards.
For a complete understanding of the EAC’s recommendations and the correct accounting treatment
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