We discussed here only those point which is extra/changes in Ind as 23.
1. Carve Out: Qualifying Assets
2. Carve Out: Substantial period of Time
3. Carve Out: Borrowing Cost
4. Carve Out: Hyper Inflationary Situation
5. Carve Out: Inventories
6. Carve Out: Disclosure
7. Carve Out: Holding & subsidiaries
|SN||Changes||AS 16||IND AS 23|
|1||Qualifying Assets||As per the provision of AS-16, Qualifying Assets may Include Biological Assets because it does not exclude specifically out of coverage.||As per the provision of IND AS 23 Biological assets can’t be covered under Q-Assets Because These assets are always carried at fair market value as per IND AS 41.
Meaning of Biological Assets: A Biological Assets is an animal or plant. It may be in the form of sheep, Goats, Buffalos, Plant, trees, crops.
Conclusion: It means we can’t capitalised Borrowing cost to the Biological Assets.
|2||Substantial period of Time||As per the provision of As16 there is specific definition/explanation on the understanding of substantial period of time.||As per the provision of IND AS 23 It is a matter of judgement. It means that there is no specific definition regarding substantial period of time.|
|As per the provision of AS16 the following items should be included in the meaning of Borrowing Cost:-
a) Interest on short/Long term loan
b) Amortised part of discount/Premium
c) Amortised part of Related Expenses
d) Finance CH under Finance lease.
e)Exchange difference under para 4(e) subject to Interest adjustement
|As per the provision of Ind AS 23 the following items should be included in the meaning of Borrowing Cost:-
a)Interest rate as per Effective Interest method.
b) Finance CH under Finance lease.
*Effective Interest method should be applied under the guidance of IND AS 109.
*As per Ind AS 109 Effective Interest rate is IRR.
|4||Hyper Inflationary Situation||There is no explanation on inflation in interest rate in the provision of IND AS 16. We can capitalised full interest to the cost of Qualifying Assets.||As per the provision of Ind As 23, we should capitalised normal interest only to the cost of Qualifying Assets. If interest cost is increase due to hyper inflationary situation then the increase in Interest cost should be written off in statement of P/L.|
|5||Inventories||As per the provision of As16 Inventories may be Qualifying assets if condition of substantial period is satisfied.||As per the provision of IND AS 23, Inventories which are produce in large quantity should not be considered as Qualifying Assets. It means that Inventories which are produce in less quantity should be considered as Qualifying assets.|
|6||Disclosure||As per the provision of AS 16 separate disclosure of Weighted average capitalisation rate is not mandatory.||As per the provision of Ind as 23, the enterprises should also disclosed weighted Average capitalisation rate in Notes to accounts.|
|7||Holding & subsidiaries||In IND AS 23 we should calculate weighted average capitalisation rate on total borrowing of Holding & subsidiaries. There Individual weighted average cost of capitalisation rate shall not be considered in consolidated statement.|