Question

what is a accounting standard 16​

Answer 1

Explanation:

Accounting Standard 16: Borrowing Costs

Statement to be applied in accounting for borrowing costs.

Statement does not deal with the actual or imputed cost of owner’s equity/preference capital.

Borrowing costs that are directly attributable to the acquisition, construction or production of any qualifying asset (assets that takes a substantial period of time to get ready for its intended use or sale) should be capitalized. Generally, a period of 12 months is considered as a substantial period of time (ASI-1 Incorporated in (AS) 16 "Borrowing Costs" as an explanation below para 3.2).

Borrowing costs may include:

Interest and commitment charges on Bank Borrowings, Other short-term and other long-term borrowings.

Amortisation of ancillary costs incurred in connection with the arrangement of borrowings.

Answer 2

Borrowing costs are capitalized in the books of accounts with the qualifying assets when it is certain that it will have future economic benefits. Any other borrowing costs must be treated as an expense in the period in which they are incurred.