INTEREST AND FINANCING CHARGES

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....standard is to bring uniformity and consistency in the principles, methods of determining and assigning the Interest and Financing Charges with reasonable accuracy. 3 Scope This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Interest and Financing Charges including those requiring attestation. This standard does not deal with costs relating to risk management through derivatives. 4 Definitions The following terms are being used in this standard with the meaning specified. 4.1. Asset: An Asset is a resource; (a) controlled by an entity as a result of past events; and (b) from which future economic benefits are expect....

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....ncing Charges are interest and other costs incurred by an entity in connection with the financing arrangements. Examples are: 1. Interest and commitment charges on bank borrowings, other short term and long term borrowings: 2. Financing Charges in respect of finance leases and other similar arrangements: and 3. Exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest costs. The terms Interest and financing charges, finance costs, and borrowing costs are used interchangeably. 4.8. Net current asset: Net current asset is the excess of current assets over current liabilities Current Liabilities shall include shor....

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.... Penal Interest for delayed payment, Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the Interest and Financing Charges. In case the company delays the payment of Statutory dues beyond the stipulated date, interest paid for delayed payment shall not be treated as penal interest. 5.7. Interest paid for or received on investment shall not form part of the other financing charges for production of goods / operations or services rendered; 6 Assignment of costs 6.1. Assignment of Interest and Financing Charges to the cost objects shall be based on either of the following principles: (a) Cause and effect- cause is the process or operati....