amount is kept in FD with the Bank. Interest is capitalized on the
amount paid as per payment certificates like draw down. If the project
is capitalized and 2 payment certificates received after the
capitalization date. Now question is whether interest will be
capitalized on amount paid after capitalization date or expensed out.
I think after the project is completed, the interest expenses, is charged to
Query is not clear:
I go with Respected Aida on this interest capitalization.
I would like to clarify something:
The capitalization of interest should begian when all of the following
three conditions have been met:
A. There is actual interset payment
B. There actual construction payments
C. The actual Construction activities had been commenced
If the dates of the above conditions are different, we have to
capitalize interest cost occured after the latest date of those.
All other interest ocst occured before the date of the capitalization
should be expensed immediately.
All interest expense occured after the date where the asset becomes
availabe for use, should also be expensed immediately
Hope this will help.
>(lets break its component parts and define)
A contract (as para of IAS 32 it need not be writting also) is an agreement enforceable by law.
Financial asset is cash (cash), right to receive cash (receivables, Bank Deposits),right to exchange any financial asset or financial liability favorably.
Financial Liability is a contratrual obligation to deliver cash (payables)or other financial asset, exchange unfavourably….
Equity instrument is one where there is no contractual obligation to deliver cash or other financial asset