As 16 related..

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hari krishnan (Querist)
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03 July 2013 AS 16 provides that borrowing costs that are directly attributable to the ACQUISITION, CONSTRUCTION, OR PRODUCTION of a qualifying asset should be capitalized as part of cost of such asset.

Now, borrowing cost for renovation of an asset-will it be capitalized?
To be specific, such a renovation of an asset is neither an acquisition, construction or production, can it be a qualifying asset ??

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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03 July 2013 Yes it can be capitalised as per AS-16 provided it qualifies as a qualifying asset(asset that takes substantial period of time to get ready for its intended use or sale)and cost is incurred directly for the said asset.

hari krishnan

hari krishnan (Querist)
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03 July 2013 Dear expert,
Sincere thanks,
But I would like to confirm if what you are saying is now that the renovation shall take a substantial period ? Is that the intended use, you mean ?

Kindly clarify,
Regards,
Hari krishnan.

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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04 July 2013 Yes.The whole renovation process should take a substantial period of time to get ready for its intended use.Substantial period primarily depends on facts and circumstances of each case.Ordinarily a 12 months period is considered substantial.

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