Can anyone solve with this question on IFRS and share the solution ??
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
Hi
PFA of the solution.
Hi
Thank you for providing the solution ,Would like to have a clarification
Whether borrowing cost should be capitalised upto the time when the building is available for use or when the construction of building is completed.
In this question construction of building completed on 28th Feb but the building is available for use on 31st March 2019(Only after the inspection by the local govt officials).
Hi it’s a good question.
Now there is a change, earlier it was capitalisation of borrowing cost till put to use. But now capitalisation is till the completion of construction.
There is a catch, the time from 28th Feb till 31st Mar can be considered under completion of construction if it is normal to take clearance in one month.Then capitalize the interest of 1 month also.
But in my solution I have considered that taking clearance from the authority as abnormal. If it is abnormal then you can’t capitalize the interest on borrowing cost. It will go to Pnl.
I hope it clears your doubt.
Thank you for the clarification !!