Borrowing Costs

According to Ind AS 23, borrowing costs expenses that are directly attributable to the acquisition, construction, or production of a qualifying asset should be:

• Ignored

• Recognized as Revenue

• Expensed as incurred

• Capitalized

How should borrowing costs be treated when they do not qualify for capitalization?

• Amortized over a longer period

• Recognized as an expense in the period incurred

• Capitalized in the subsequent period

• Recorded as a liability

What is the benchmark for determining the capitalization rate for borrowing costs?

• Prime lending rate

• Company's actual borrowing rate

• Industry average borrowing rate

• Government bond rate

When does the capitalization of borrowing costs cease under Ind AS 23?

• When the asset is sold

• When the loan is fully repaid

• When the construction is complete

• When substantially all the activities necessary to prepare the asset for its intended use or sale are complete

How are borrowing costs for inventories treated under Ind AS 23?

• Always capitalized

• Never capitalized

• Capitalized if they meet specific criteria

• Treated as a separate category in financial statements

What is the disclosure requirement for borrowing costs under Ind AS 23?

• No disclosure required

• General information only

• Specific disclosures, including the amount of borrowing costs capitalized

• Disclosure only if there is a significant impact on financial statements

What is a qualifying asset under Ind AS 23?

• Any asset

• Land

• Inventory

• An asset that necessarily takes a substantial period of time to get ready for its intended use or sale

When does the capitalization of borrowing costs begin, according to Ind AS 23?

• When the asset is substantially complete

• When borrowing costs are incurred

• When the asset is ready for use

• When the asset is sold

Which financial statements are affected by the capitalization of borrowing costs under Ind AS 23?

• Balance sheet only

• Income statement only

• Both balance sheet and income statement

• Cash flow statement only

How are exchange differences on foreign currency borrowings treated under Ind AS 23?

• Capitalized

• Expensed as incurred

• Deferred

• Ignored for accounting purposes