Finance charges under lease with ref. to AS - 16
This query is : Resolved
12 November 2009
Under A S - 16, borrowing cost includes the finance charges under Finance lease. Also, BC can be capitalised only if an asset is QA.
However, as per AS - 19, there is no such example or statement is provided.
Please let me know any example or case where finance charges of an leased asset under finance lease can be clubbed in the asset cost.
However, as per AS - 19, there is no such example or statement is provided.
Please let me know any example or case where finance charges of an leased asset under finance lease can be clubbed in the asset cost.
13 November 2009
Hi Abhishek, good question. Para 4 gives u the examples of borrowing costs. as per AS 16 borrowing cost can be capitalised till the time asset is ready for commercial use.Once the asset is ready for intended use, then the borrowing cost will be dr. to P/L A/c. In case of finance lease, normally, the ready to use assets are taken therefore there is no question of capitalisation of finance charges as it will then be considered as revenue exp. Thanks and regards,
CA Shakuntala Chhangani
CA Shakuntala Chhangani
13 November 2009
See in M.P. VIJAY KUMAR Book
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