AS 16 on WIP
This query is : Open
CA Sahil Singla..
(Querist)
11 March 2011
Sir
A Co. has taken a Term Loan for Constructing a Building. The borrowing cost is being incurred from Jan 2011 at the rate of let us say 50000 per month. Again assuming that the firm is not going to put the asset in use till the end of Accounting year ended 31.03.2011. So plz tell me wat to do in this regard as per AS 16 Borrowing Costs. Also, If there is no requirement to Capitalize the Int. cost, then wat would be the Journal Entry for Int. Cost incurred ?
A Co. has taken a Term Loan for Constructing a Building. The borrowing cost is being incurred from Jan 2011 at the rate of let us say 50000 per month. Again assuming that the firm is not going to put the asset in use till the end of Accounting year ended 31.03.2011. So plz tell me wat to do in this regard as per AS 16 Borrowing Costs. Also, If there is no requirement to Capitalize the Int. cost, then wat would be the Journal Entry for Int. Cost incurred ?
CA Ravi Sisodia
(Expert)
11 March 2011
capitalisation of borrowing cost is up to the qualifying assets is ready to use or ready to sale.
we are not consider whether assets put to use or not.
we are not consider whether assets put to use or not.
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CA Sahil Singla..
(Querist)
11 March 2011
sir
plz tell me the answer of 2nd quetion regarding jornal entry....if AS 16 not applicable ? but the asset will be ready to use in next yr...so should i t/f int. to p/l this yr ?wat will be the treatment next yr ?
plz tell me the answer of 2nd quetion regarding jornal entry....if AS 16 not applicable ? but the asset will be ready to use in next yr...so should i t/f int. to p/l this yr ?wat will be the treatment next yr ?
CA Ravi Sisodia
(Expert)
11 March 2011
Assets a/c Dr.
to interst
(capitalisation of borrowing cost)
P&L a/c Dr.
to interst
(being interst charged to p&l a/c as revenue expenditure)
Assets a/c Dr.
to interst
(capitalisation of borrowing cost)
P&L a/c Dr.
to interst
(being interst charged to p&l a/c as revenue expenditure)
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CA Sahil Singla..
(Querist)
12 March 2011
Let me clarify my question-
Suppose a co. has taken T/L in Jan 2011 on wich int. is incurred @ 20000/month till 31.03.2011.
The machinery is under progress as on 31.03.2011. So, wat to do of int. in this case ? Should i capitalise ?
if no, then should i T/f the intt. To P/l A/c ?
Suppose a co. has taken T/L in Jan 2011 on wich int. is incurred @ 20000/month till 31.03.2011.
The machinery is under progress as on 31.03.2011. So, wat to do of int. in this case ? Should i capitalise ?
if no, then should i T/f the intt. To P/l A/c ?
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