AS - 16 - Borrowing Casts

AS 16: Guidelines for Capitalizing Borrowing Costs on Qualifying Assets in Financial Statements

Accounting Standard (AS) 16 prescribes the treatment for borrowing costs in financial statements. Borrowing costs include interest and other costs related to borrowing funds. The standard applies to borrowing costs directly attributable to acquiring, constructing, or producing qualifying assets, which are assets requiring a substantial period to be ready for use or sale. Such costs should be capitalized, while other borrowing costs are expensed. The standard provides guidance on determining eligible borrowing costs, including specific and general borrowings, and addresses the commencement, suspension, and cessation of capitalization. Disclosure of the accounting policy and capitalized borrowing costs is required in financial statements.