I would like to request for your opinion on IAS 23
Funds Borrowed $100 for construction projects
Int @5% p.a.
Out of above $100, kept in bank fixed deposits $80 and balance utilized for construction projects. Later on further $40 paid from FD for Construction projects.
Interest on $100 accounted as interest expense
Interest exepnses DEBIT
Lender A/C CREDIT
Interest on FD accounted as interest income
BANK A/C DEBIT
Interest Income A/C CREDIT
Interest on amount utilized on construction projcets from the date of borrowing till completion of projects accounted as under:
CIP A/C DEBIT
Interest expense A/C CREDIT
IAS 23 States, Borrowing cost should be capitalized net of investment income earned on idle funds.
Please give calculation of interest to be capitalized.