Borrowing cost on qualifying assets

Borrowing costs incurred for qualifying assets are capitalised. These are the costs which would have been avoided if the qualifying asset was not constructed.

CA Suraj Lakhotia

Admin

27-Aug-24 12:33

So it means if a company takes a loan of ₹1 00,00,000 @10% p.a interest rate on 1st April 2023 to construct a factory but the factory construction has been delayed for one year due to some reasons, so here the interest for the delayed period(1st apr. 2023 to 31st Mar. 2024)₹1000000 should be avoided ie., it should not be capitalised.Am I right? If yes then how should we treat the delayed period interest of ₹10,00,000.shall we take it as abnormal loss?

Thread Starter

Nisha M

CA Final

★ 2K+

29-Aug-24 16:19

If delay is due to abnormal reasons, than you should expense it

CA Suraj Lakhotia

Admin

02-Sep-24 14:35

Okay Sir

Thread Starter

Nisha M

CA Final

★ 2K+

02-Sep-24 15:49