Can any one tell me about the treatment of Expenditure incurred in obtaining the loan? Will it be treated in the same way as interest on borrowing(AS-16)?
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 03 December 2009
Dear Lokesh,
A.S-16 deals with borrowing costs.Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.
In my opinion, other costs includes expenditure incurred on obtaining the loan.Hence the treatment should be the same as A.S.-16.
Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 03 December 2009
Yes, what is stated by Ms.Fatema is absolutely right.
Sandeep Yadav
(CA Final )
(67 Points)
Replied 08 September 2010
Cost incurred to obtain the loan is like the financial exp. You have to debit the profit & loss account with the said amount.
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