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CA Final · Financial Reporting · Ind AS 23 Borrowing Costs

Which of the following best describes a qualifying asset as defined in Ind AS 23?

A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. The test is the time needed to prepare the asset, not how it is financed, its size, or whether it is property, plant and equipment.

  1. AAny asset financed wholly through borrowed funds
  2. BAn asset that necessarily takes a substantial period of time to get ready for its intended use or saleCorrect
  3. CAn asset whose cost exceeds the net worth of the entity
  4. DAny item of property, plant and equipment acquired during the year

Explanation

Ind AS 23 defines a qualifying asset as one that necessarily takes a substantial period of time to get ready for its intended use or sale. Source of finance, size or category of the asset does not determine qualification, so the option about assets financed wholly by borrowing is wrong.

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