Borrowing cost

As per the IFRS, all of the following are qualifying assets, except;

• Manufacturing plants and Power generation facilities
• Inventories that require substantial period of time
• Assets ready for sale
• None of the above

Which of the following statement is correct?

• Entire exchange gain is reduced from the cost of the qualifying asset
• Entire exchange loss is added to the cost of the qualifying asset
• No adjustment is done for the exchange loss while computing cost of the qualifying asset.
• None of the above

Capitalisation rate considers:

• Borrowing costs on general borrowings only
• Borrowing costs on general and specific borrowings both
• Borrowing costs on specific borrowings only
• All of the above

If the amount eligible for capitalisation in case of inventory is 24,000 and cost of the inventory is 80,000 and its net realisable value is 90,000, what amount can be capitalised as part of the inventory cost

• 24000
• 5000
• 12,000
• 10000

How shall an entity recognise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset?

• As an asset
• As an equity
• A liability
• As an expenses

A qualifying asset is an asset that necessarily takes __________ to get ready for its intended use or sale.

• At least 12 months
• At least 6 months
• A substantial period of time
• Not more than 12 months

Assets that are ready for their intended use or sale when acquired are not qualifying assets.

• True
• False

What describes suspension of capitalisation the best?

• Capitalisation is suspended during the period when substantial technical and administrative work is being carried out.
• Capitalisation is suspended when there is a temporary delay is a necessary part of the getting the asset ready for its intended use or sale.
• Capitalisation is suspended during the extended period in which active development is interupted.
• It should be suspended in 12 months whether is assets is ready or not.

Can interest on working capital finance be capitalised as borrowing costs?

• False
• True

Borrowing costs includes all of these except,

• Commitment charges
• Training cost
• Exchange differences
• Interest