KPK Limited installs a new Plant: invoice cost ₹45,00,000, dismantling cost (after 5 yrs) ₹3,25,000, initial operating losses ₹4,00,000, interest on deferred credit to supplier ₹2,50,000, delivery & handling ₹1,85,000, site preparation ₹5,00,000, consultancy on acquisition ₹6,75,000. Per AS 10, the cost that can be capitalised is:

1. Step 1: AS 10 capitalises invoice cost + dismantling + delivery + site preparation + consultancy. It excludes initial operating losses and finance cost on deferred credit (treated separately). 2. Step 2: 45,00,000 + 3,25,000 + 1,85,000 + 5,00,000 + 6,75,000 = ₹61,85,000. 3. Step 3: Initial operating losses (4,00,000) and interest on deferred credit (2,50,000) are NOT capitalised. _Source: ICAI BoS CA Inter Paper 1 Practice MCQ Paper (89270bos-aps3012-int-p1), Q.9_