Question

A company purchases a fixed-income security that

provides interest on a half-yearly basis. The interest is accrued but not yet received at the balance sheet date. How should this be accounted for under AS 13?

A The interest should be recorded as a liability.

B The interest should be ignored until received.

C The interest should be added to the cost of investment.

D The interest should be recognised as income on an accrual basis.

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Solution