Trial run expenditure

[Guest]

We have started production in may 11 but it took a month to stablise the production ie to the normal capacity .

Whether we can treat that one month expenditure as trail run and capitalise accordingly. pls advice 

[manoj lalwani]

Yes the expenditure incurred for trial run can be capitalised

AI Summary

Trial run expenditure may be capitalised when production requires a stabilisation period after commencement of operations. Expenditure incurred during a one month post commencement stabilisation period after production began may be capitalised as trial run expenditure, treating the trial run costs as capital rather than revenue in nature.