When funds are borrowed specifically for construction of a qualifying asset in a year , should interest be capitalised if the amount of expenditure incurred during the year is less than the amount borrowed.
For e.g if expenditure incurred is 500,000 and amount borrowed is 10,00,000 @ 10% p.a , should interest capitalised be 50,000/- or 100,000/- . There are tutors who have suggested that the correct amount is 100,000/-.
please advise.
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