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CMA Intermediate · Financial Accounting · Borrowing Costs (AS 16)

Under AS 16 Borrowing Costs, which pair of items must an enterprise disclose in its financial statements?

AS 16 requires an enterprise to disclose the accounting policy it has adopted for borrowing costs and the amount of borrowing costs capitalised during the period. It does not require the capitalisation rate or a list of every loan, so the policy and capitalised amount are the correct pair.

  1. AThe accounting policy adopted for borrowing costs, and the amount of borrowing costs capitalised during the periodCorrect
  2. BThe capitalisation rate used, and the income earned on temporary investment of borrowings
  3. CThe list of all qualifying assets, and the weighted average cost of every loan outstanding
  4. DThe accounting policy adopted for borrowing costs, and the total interest paid on loans repaid during the period

Explanation

AS 16 requires disclosure of the accounting policy adopted for borrowing costs and of the amount of borrowing costs capitalised during the period. Disclosure of the capitalisation rate is not a requirement of AS 16, so the second option is wrong. The other options list items that the standard does not call for.

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