CA Final All FR notes

📚 Let Us Sum up IndAS 23 Borrowing cost! Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. A qualifying asset is an asset that necessarily takes a substantial period to get ready for its intended use or sale. 1️⃣ Scope Out: 🧐 • Actual or imputed cost of equity, including preferred capital not classified as a liability • Qualifying asset measured at fair value • Inventories that are manufactured, or otherwise produced, in large quantities on a repetitive basis 2️⃣ Exchange Loss/Gain Treatment: 💹 • The adjustment of exchange loss does not exceed the difference between the cost of borrowing in functional currency when compared to the cost of borrowing in a foreign currency. • Unrealised exchange loss which is treated as an adjustment to interest and subsequently there is a realised or unrealised gain in respect of the settlement or translation of the same borrowing, the gain to the extent of the loss previously recognised as an adjustment should also be recognised as an adjustment to interest. 3️⃣ Recognition: 🏆 Capitalise borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset as part of the cost of that asset. Other borrowing costs as an expense in the period in which it incurs them. Specific Borrowing Step 1: Determine the actual amount of borrowing costs eligible for capitalisation during the period less any investment income on the temporary investment of those borrowings. Step 2: Borrowing cost= Step 1* Interest rate on such Specific borrowing General Borrowing Step 1: Calculate Capitalisation Rate Weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period (excluding Specific Borrowing) Total amount of Outstanding borrowing costs it incurred during that period (excluding Specific Borrowing) Step 2: Borrowing Cost= Expenditure Incurred on Qualifying Asset * Step 1 4️⃣ Commencement: 🚀 The commencement date for capitalisation is the date when the entity first meets all of the following conditions: (a) It incurs expenditures for the asset (b) It incurs borrowing costs (c) It undertakes activities that are necessary to prepare the asset for its intended use or sale. 5️⃣ Suspension: 🚫 An entity shall suspend capitalisation of borrowing costs during extended periods in which it suspends active development of a qualifying asset. 6️⃣ Cessation: 🛑 An entity shall cease capitalising borrowing costs when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. 7️⃣ Disclosure: 📢 (a) the amount of borrowing costs capitalised during the period (b) the capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation.

Ind-As 7 FR

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