Acquisition

Capitalize if : Borrowing
Net BC = (Loan Amount * Rate) - Temporary investment income Only for QA Specific is taken for QA Construction
BC = Loan Amount * Weighted avg rate* period in use Used for all Types of b
Production
General or r ow ing
When QA ready to use/ sale, after that period Specific to general
Cost of equity / preference - not a liability

Exclusions QA measured at fair value I nd AS 41

Capitalize when
FEB 2 conditions are I nventories - large quantites & repetative basis
satisfied
Cost measured reliably Recognit ion I nterest - effective inte
I ND AS 23 Bor r ow ing cost rest rate method I nd AS 109

I nclusions I nterest & other costs I nterest - lease liabilities I nd AS 116

Loan value * (Starting forex rate (-) Ending forex rate) Formula
Exchange differences - FC Borrowings
When start forex rate < end forex rate
substantial period to get ready for use/ sale 12 months
Maximum = I nterest on FC loan
Forex Loss
(-) I nterest on I ndian loan Capitalize I nventories
Total Forex difference (-) loss capitalized Remaining- P&L Ex change dif f er ence Qualifying asset (QA)
Manufacturing plants
When start forex rate > end forex rate Power gen facilities
Examples
Maximum = I nterest on FC loan Adjustment to for I ntangible assets
Forex Gain
(-) I nterest on I ndian loan ex loss balance
I nvestment properties
Total Forex difference (-) gain adjusted Remaining- P&L
Bearer plants
 Cash payment

Transfer of assets
Expenditure incurred for QA
Preference share (classified as liability) Dividend payable = BC I nterest bearing liabilities

Capitalize CFS Less : Progress payment/ grant received

3rd party borrowing Com m encem ent Satisfy all 3 conditions
No cap Standalone FS Borrowing cost incurred
Group financial statements of capit alisat ion
No cap CFS Technical/ admin work
I nter group borrowing Ot her t opics
Necessary activities started Exclude cap when no production/ d
Capitalize Standalone FS
evelopment took place
Difficult to determine > when period of prod'n end
Maturing I nventories
I nventory classify as held for sale Suspend Active development of QA is suspended
I f can't be demostrated I ND AS 23 Suspension of C
No further capitalisation of BC Not suspend Temporary delay necessary part of process
apit alisat ion

Amount of BC Capitalised
Capitalisation rate
Substantially all activities for use/ sale - complete
Disclosur e
Each part capable of bei
Cessat ion of c ng used when other par
apit alisat ion ts are not ready Cease cap > on part which is ready
Construction of QA in parts
No part can be seperately put to use Continue cap > even on ready parts