Manual - ICDS V : Tangible Fixed Assets

The expenditure incurred on start-up and commissioning of a project including expenditure on test runs and experimental production is to be capitalized while the expenditure incurred after the plant begins commercial production is to be treated as revenue expenditure.

However, administration and other general overhead expenses are to be excluded from the cost of tangible fixed assets if they do not relate to a specific tangible fixed asset. Such expenditure should, therefore, be allowable as revenue expenditure.

Capitalization of test-run and commissioning expenditure: pre-commercial costs capitalized, post-commercial costs treated as revenue excluding general overheads. Expenditure on start-up and commissioning, including test runs and experimental production, must be capitalized as part of the cost of the tangible fixed asset until commercial production begins; expenditure after commercial production is revenue expenditure. Administration and general overheads not relating to a specific tangible fixed asset are excluded from asset cost and treated as revenue expenditure.