Accounting Standard 6 and 18

PROJECT ON ACCOUNTING STANDARDS
1. ACCOUNTING STANDARD 16
2. ACCOUNTING STANDARD 21

SUBMITTED TO: PROF. T.K. NAGPAL

SUBMITTED BY: VARUN FN3 FN2

Accounting Standard (AS) 16
(issued 2000) Borrowing Costs

(This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the Preface to the Statements of Accounting Standards1.)
The following is the text of Accounting Standard (AS) 16, ‘Borrowing Costs’, issued by the Council of the Institute of Chartered Accountants of India. This Standard comes into effect in respect of accounting periods commencing on or after 1-4-2000 and is mandatory in nature.2 Paragraph 9.2 and paragraph 20 (except the first sentence) of Accounting Standard (AS) 10, ‘Accounting for Fixed Assets’, stand withdrawn from this date.
Objective
The objective of this Statement is to prescribe the accounting treatment for borrowing costs.
Scope
1. This Statement should be applied in accounting for borrowing costs.
2. This Statement does not deal with the actual or imputed cost of owners’ equity, including preference share capital not classified as a liability.
Definitions
3. The following terms are used in this Statement with the meanings specified:
Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.
A qualifying asset is an asset that necessarily takes a substantial period of time3 to get ready for its intended use or sale.
4. Borrowing costs may include:
(a)