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As - 16 qualifying assets

AS 4631 views 1 replies

Consider following case for qualifying assets :-

Plant & Machinery - Time to complete installation 4 months.

DG Set - 1 month

Transformer - 1 month

Building - more than 1 year.

 

Whether all the above assets are qualifying assets ?

while identifying Qualifying assets whether all the assets in a group is to be seen separately or they are to be seen as a whole group?

In above case  DG & transformer are plant & machinery and so whether they are qualifying assets or not.

 

whether we consider total number of  assets as one group ?

Building has taken more than 1 year, so it is a qualifying asset. tell about others.

 

 

 

Replies (1)

As per AS-16, an asset whihc takes a substantial period of time to gets itself ready for it's intended use is considered as an qualifying asset.

In your question all the assets other than Building do not meet the recongnition criteria to be considered as an qualifying asset as per AS-16, so they cant be considered as qualying asset

All the assets are to be considered seperately for the purpose of Borrowing Costs, as the AS states that 'A qualfying Asset is eligible for capitalization'.  however this would depend on the facts & circumstances of each case whether the assets taken toghether are to be considered as an qualying asset, if they can be used in conjunction.


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