Adherence of AS-16 Borrowing Costs by Non- Corporate Entities; A Descendant Note
Abstract
All organisations whether profit oriented or not need funds either borrowed or owned for investing in its operating assets on a regular basis. Borrowed funds attracts the periodical interest payments and also includes other costs like discounts, finance charges, ancillary costs etc. Proper accounting of such borrowing cost is equally applicable both for the corporate and non-corporate entities in order to report true and fair state of affairs of the business. In this regard, the Accounting Standard – 16 “Borrowing Costs” specifies the criteria for Recognition and Measurement, Presentation and Disclosure of borrowing costs incurred by an entity on its qualifying assets. How far this Accounting Standard is adhered, particularly by the noncorporate entities is a million-dollar question. The present study intends to analyse the treatment of borrowing costs incurred by the non-corporate entities on the qualifying assets. For a deeper analysis of the issue, an enquiry on 30 non-corporate entities was made and analysed the results thereof. The study revealed some interesting facts regarding the issue. Non adherence of AS - 16 among non-corporate entities is evident from the study.
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