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AS 10 PPE
Accountancy
Dear sir, Interest charges paid to the supplier of the plant for the "deferred credit term" means sir? Why is it not included while calculating the cost of assets? It's also mentioned in study material that it is not a qualifying asset.
Answers (3)
Deferred Payment: Instead of paying the full amount upfront, the buyer agrees with the supplier to pay for the plant or equipment over time, in installments. Interest Charges: Since the supplier is essentially providing credit to the buyer by allowing them to defer payment, the supplier may charge interest on the outstanding balance. This interest is compensation for the time value of money and the risk the supplier takes in providing credit.
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