AS - 16 Practical Difficulty

We have taken a loan for a qualifying asset...Its Right to capitalise interest on the asset..But if we donot pay the interest and get it converted to FITL ie a fresh loan , then whether the interest on such FITL will also be capitalised.. Please help me out..
Replies (3)

If other conditions as mentioned in AS 16 relating to capatilsation of borrowing cost are satisfied then interest on FITL must be capitlaised.

Thanks Munjal...Is there any clarification or notification in this regard because we are doing it the other way...We are treating it Revenue Expense..

There is no notification or clarification in my knowledge. However looking at the substance of the transaction (1) it is a term loan (2) it is utilised for qualifying asset and (3) Interest will be paid on such non repayment of loan. So in my view there is no reason for you to charge it to revenue account. 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
28 October 2026
Assistant Director/ Associate Director-Finance & Accounting

Krea University

Chennai

CA

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
ARTICLESHIP 28 October 2026
Article assistants

Shyam S Gupta and Company

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 29 October 2026
Article Assistant (CA Inter / CMA Inter) - Thrissur

Varma Raja & Associates

Thrissur

CA Inter

View Details
Company
24 October 2026
CA Industrial Trainee

Fytomax Nutrition Private Limited

Aurangabad

CA Inter

View Details
Company
Featured 29 October 2026
Accounts Executive

Synergy Keystone

Chennai

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
CA Articleship / Article Assistant

M N Rao & Associates LLP

Vijayawada

CA Inter

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details