IND AS- 23 outlines the accounting treatment for borrowing costs. Borrowing costs include interest and other costs incurred in borrowing funds. Qualifying assets are those that require a substantial period of time to get ready for their intended use or sale. Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset must be capitalized as part of the cost of that asset. The document then provides an example calculation of the annual borrowing costs for a project costing Rs. 50 lakh that is financed through various loans with different interest rates and repayment terms.

1. IND AS- 23

2.  BORROWING COST :- Interest and other cost
incurred for the borrowing of funds.
 Qualifying assets :- The asset which take substantial
period of time to get ready for its intended use or
sale.

3.  Interest on bank overdraft, and short term and long
term borrowing.
 Finance charges related to finance lease.
 Exchange difference arising from Foregin currency
borrowing to the extent that they are regarded as an
adjustment to interest costs.
Borrowing cost that are directly attributable to the
acquisition construction or production of a qualifying
assets shall be capitalized as a part of the cost of the
assets.

4.  Particulars Amount
1) Interest on bank, OD, Short term &long term xxx
1) Loans
2) Amortization of premium or discounts on xxx
1) Loans
3)Amortization of ancillary costs in the arrangem xxx
-ent of loans
4) Finance charges which are part of financial xxx
lease
5) Exchange differences reflection interest cost xxx
1) xxxx

5.  Calculation the borrowing cost :
a. Project cost Rs.50 lakh ,25lakh is financed by 12%
debenture repayable in 5years .10lakh by HDFC
loan @10%p.a. interest and balance of 15lakh loan
from Canara bank @12% p.a. interest and both
repayable in 4 years.
b. The cost of issue of debenture is Rs.1 lakh .
c. The service and consultancy charges for HDFC
and canara bank Rs.50000
d. Debenture repayable @5%premium.

6. Particular amount
1) Interest on debenture
2500000x 12/100 300000
2)Interest on HDFC loan
1000000x 10/100 100000
3) Interest on canara bank
1500000x12/100 180000
4) Cost issue debenture
100000x 5years 20000
5) Service charges
50000x4 years 12500
6) Premium on debenture
2500000x5/100x5years 25000
Annual borrowing cost 637500