Gases Ltd. is installing a 2000 kms long gas pipeline for distribution of gasses (Project is a qualifying asset as per AS 16). For this purpose it…
CA Intermediate · Advanced Accounting · MTP · September 2025
Gases Ltd. is installing a 2000 kms long gas pipeline for distribution of gasses (Project is a qualifying asset as per AS 16). For this purpose it borrowed funds for 700 Lakhs at subsidised rates and has to pay annually an interest of 70 Lakhs. The Company has also invested unused funds and is earning an income of 7 Lakhs annually. During the next year the Company used all funds and no income is now being earned. During the year 5, the Company has completed 1 stretch of 100 kms which is operational between two points and is capable of intended use.
Suggested Answer and Working Notes:
Correct Answer: Option (C)
63 Lakhs
Topics: AS 16, AS 1, Applicability of AS
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