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Under AS 10, how are initial delivery and handling costs of a newly purchased plant treated?
AExpensed immediately as carriage inward charges
BAdded to the inventory of stores and spares
CCapitalised as a directly attributable cost
DTreated as a prepaid expense to be amortised
Answer & Solution
Correct answer: C. Capitalised as a directly attributable cost
1. Delivery and handling costs are incurred to bring the asset to its location for intended use.
2. AS 10 classifies such costs as directly attributable costs.
3. The ₹1,85,000 delivery and handling cost is therefore capitalised.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 MCQ — Q.9, AS 10 Property, Plant & Equipment._
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