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AS 16

BORROWING COSTS (issued in 2000)



The objective of this Standard is to prescribe the accounting treatment for borrowing costs.



This Standard should be applied in accounting for borrowing costs.

And it does not deal with the actual or imputed cost of owners’ equity, including preference share capital not classified as a liability.



Borrowing costs:

Costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.


Qualifying asset:

It is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.



Borrowings are two types they are General borrowings and Specific borrowings.

How to and what to Capitalize & Cessation of borrowing costs:


Disclosure requirements:

The following should be disclosed:

The accounting policy adopted for borrowing costs

The amount of borrowing costs capitalized during the period.





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