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Q. > Please Help: as -16
A raised 10% loan of RS. 100000 on 1.7.2004 to meet the cost of construction of an asset. The total cost construction of an asset (completed on 31.12.2004) came to rs 200000. The amount borrowed for construction was temporarily invested by A in short term deposit which earned interest of rs.2000.the cost of asset as on…
Ive done this:- 100000*10%*6/12=5000-2000=3000+200000= 203000.
answered Oct 04, 2011 by Ashish Karundia , New Delhi
Anu, Your understanding is correct (Kudos for that). The amount to be capitalized in the instant case will be Rs. 3,000 only (i.e. 5,000 - 2,000).
In this regard, you can refer para 10 and 11 of Accounting Standard - 16 'Borrowing Cost' issued by the ICAI.
Hope the above answers your query.
answered Oct 05, 2011 by CA VIPIN GARG , New Delhi
You are perfect in your approach Anu Ji, Good going, have a nice day and please ask any further query, if u have ...........
answered Mar 03, 2012 by Ketan Samdani , V V Nagar
The calculation done by you is correct.
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anu jain
05-Oct-2011 , 10:11:49 amobviously i will ask vipin ji..