AS 16 - 302 Accounting Standard (AS) 16 (issued 2000)...

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302 Accounting Standard (AS) 16 (issued 2000) Borrowing Costs Contents OBJECTIVE SCOPE Paragraphs 1-2 DEFINITIONS 3-5 RECOGNITION 6-22 Borrowing Costs Eligible for Capitalisation 8-12 Excess of the Carrying Amount of the Qualifying Asset over Recoverable Amount 13 Commencement of Capitalisation 14-16 Suspension of Capitalisation 17-18 Cessation of Capitalisation 19-22 DISCLOSURE 23 The following Accounting Standards Interpretations (ASIs) relate to AS 16: ASI 1- Substantial Period of Time ASI 10- Interpretation of paragraph 4(e) of AS 16 The above Interpretations are published elsewhere in this Compendium.
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Accounting Standard (AS) 16 (issued 2000) Borrowing Costs (This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the Preface to the Statements of Accounting Standards 1 .) The following is the text of Accounting Standard (AS) 16, ‘Borrowing Costs’ , issued by the Council of the Institute of Chartered Accountants of India. This Standard comes into effect in respect of accounting periods commencing on or after 1-4-2000 and is mandatory in nature. 2 Paragraph 9.2 and paragraph 20 (except the first sentence) of Accounting Standard (AS) 10, ‘Accountin g for Fixed Asse ts’ , stand withdrawn from this date. Objective The objective of this Statement is to prescribe the accounting treatment for borrowing costs. Scope 1. This Statement should be applied in accounting for borrowing costs. 2. This Statement does not deal with the actual or imputed cost of owners’ equity, including preference share capital not classified as a liability. 1 Attention is specifically drawn to paragraph 4.3 of the Preface, according to which Accounting Standards are intended to apply only to items which are material. 2 Reference may be made to the section titled ‘Announcement s of the Council regarding status of various documents issued by the Institute of Chartered Accountants of India’ appearing at the beginning of this Compendium for a detailed discussion on the implications of the mandatory status of an accounting standard.
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304 AS 16 (issued 2000) Definitions 3. The following terms are used in this Statement with the meanings specified: Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds. A qualifying asset is an asset that necessarily takes a substantial period of time 3 to get ready for its intended use or sale. 4. Borrowing costs may include: (a) interest and commitment charges on bank borrowings and other short-term and long-term borrowings; (b) amortisation of discounts or premiums relating to borrowings; (c) amortisation of ancillary costs incurred in connection with the arrangement of borrowings; (d) finance charges in respect of assets acquired under finance leases or under other similar arrangements; and (e) exchange differences arising from foreign currency borrowings
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This note was uploaded on 12/07/2011 for the course MBA 0001 taught by Professor Akshat during the Spring '09 term at Institute of Management Technology.

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AS 16 - 302 Accounting Standard (AS) 16 (issued 2000)...

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