Treatment of interest costs in a start up company

MOHIT KUMAR JAIN (CFO) (68 Points)

30 November 2012  

Please give your opinion on the accounting treatment as per Accounting Standards of interest cost paid and earned by a Company which even after 2 years of incorporation has not started to implement the project (sugar mill).

Not even a single purchase order or work order has been issued by the Company till date.

Issues involved are:

1. Can interest income be netted from interest cost and put in CWIP?

2. Can interest income be netted from interest cost and charged off to P/L of that year? Will IT Act allow the carry forward of such loss?

Thanks in advance.