Skip to content

CA Final · Financial Reporting · Ind AS 23 Borrowing Costs

Which of the following best matches the Ind AS 23 definitions as stated in the standard?

Borrowing costs are interest and other costs an entity incurs in connection with borrowing funds. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Cost size or related-party status is irrelevant.

  1. ABorrowing costs are only interest on bank loans; a qualifying asset is any asset costing over Rs 1 crore
  2. BBorrowing costs are interest and other costs incurred in connection with borrowing of funds; a qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use or saleCorrect
  3. CBorrowing costs are dividends on equity; a qualifying asset is any financial asset
  4. DBorrowing costs are interest only on specific loans; a qualifying asset is one acquired from a related party

Explanation

Para 5 defines borrowing costs as interest and other costs that an entity incurs in connection with the borrowing of funds. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. No cost threshold applies and the definition is not limited to interest.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 23 Borrowing Costs shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 23 Borrowing CostsFree diagnostic mock

More Ind AS 23 Borrowing Costs questions