Interest revenue earned on specific borrowings for qualifying assets

Question

Quizplus · Accepted Answer

Interest revenue earned on specific borrowings for qualifying assets is treated as a reduction in the cost of the qualifying asset as per the accounting treatment. This is because the interest revenue earned is used to offset the interest expense incurred on that specific borrowing for the asset, thereby reducing the overall cost of the asset. It does not affect the interest expense reported on the income statement or increase equity in the period earned.

Interest Revenue Earned on Specific Borrowings for Qualifying Assets