Query on AS 16


(Guest)

hey ppl,

I have a query on AS 16 . . regarding calculation of borrowing cost to be capitalized with respect to general borrowings.

 

As per clause 12 of AS 16 it says :

For any general borrowing

Step 1: Compute capitalization rate (i.e)

     Weighted avg rate of all general borrowings (Less) Any specific borrowings

Step 2 : Calculate interest to be capitalized by charging this interest rate on the "Expenditure Incurred on this Asset"

Now my question is :

Should the total expenditure on asset include CENVAT/VAT/Service tax if any or

it should be  excluding the above components(i.e. the value of the asset actually capitalized) Since it is not a expenditure and subsqtly credit can be availed for the same. .

 

Kindly help

Regards

Kaushik