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    Question

    A company obtains a loan with interest rate linked to

    external benchmark and pays interest monthly. For presentation of finance cost under Ind AS, interest expense should be:
    A Capitalised only if directly attributable to qualifying asset; otherwise expensed in P&L as incurred Correct Answer Incorrect Answer
    B Always capitalised regardless of usage Correct Answer Incorrect Answer
    C Never capitalised, always expensed Correct Answer Incorrect Answer
    D Classified as OCI items only Correct Answer Incorrect Answer

    Solution

    The accounting for borrowing costs is governed by Ind AS 23. Interest is capitalized only if it is directly attributable to the acquisition, construction, or production of a qualifying asset. All other borrowing costs are expensed.

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