Carriage on purchase of fixed asset is __________ to cost of asset.

Added

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Deducted

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Not effect

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None

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Solution

The correct option is A Added
Expenditure incurred upto the date at which the asset becomes ready to commence commercial production (i.e., production intended for sale or capitative consumption ) should bed capitalized and expenditure incurred after this cut off date should be treated as revenue expenditure.
Cost of assets includes :
Freight and in-transit Insurance
Import duties and other non refundable taxes
Cartage and carriage expenses
Site preparation costs
Installation cost, such as special foundation or plant
Professional fees for architects and engineers
Expenditure incurred on test runs and experimental production
Borrowing cost incurred upto the date at which substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.
Therefore, carriage on purchase of fixed asset is added to cost of asset.

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