Alpha Ltd. on 1st April, 20X1, borrowed - 30,00,000 @ 9% to finance the construction of two qualifying assets. Construction started on 1st April,…
CA Final · Financial Reporting · MTP · September 2025
Alpha Ltd. on 1st April, 20X1, borrowed - 30,00,000 @ 9% to finance the construction of two qualifying assets. Construction started on 1st April, 20X1. The loan facility was availed on 1st April, 20X1 and was utilized as follows with remaining funds invested temporarily at 7%: Factory Building Office Building 1 st April, 20X1 5,00,000 10,00,000 1 st October, 20X1 5,00,000 10,00,000 Calculate the cost of the asset and the borrowing cost to be capitalized.
Suggested Answer and Working Notes:
(ii) Particulars Factory Building Office Building Borrowing Costs (10,00,000 x 9%) (20,00,000 x 9%) 90,000 1,80,000 Less: Investment Income (5,00,000 x 7% x 6/12) (10,00,000x7% x 6/12) (17,500) (35,000) 72,500 1,45,000 Cost of the asset: Expenditure incurred 10,00,000 20,00,000 Borrowing Costs 72,500 1,45,000 Total 10,72,500 21,45,000
Topics: Ind AS 23, Ind AS 19
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