'Borrowing Costs' eligible for capitalization are determined as per: MCQ with Answer and Explanation

'Borrowing Costs' eligible for capitalization are determined as per:
A. AS 9
B. AS 16
C. AS 10
D. AS 12
Answer: Option B
Solution (By JKSSB Mock Tests)
AS 16 Borrowing Costs provides guidance on capitalization of borrowing costs on qualifying assets.

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Practice More Accountancy and Book Keeping Questions

Question #1
Assertion (A): In the absence of a partnership deed, partners are entitled to interest on capital at 6% p.a. Reason (R): The Indian Partnership Act, 1932 allows interest on capital only if there is an agreement. Choose the correct option:
A. A is true but R is false.
B. A is false but R is true.
C. Both A and R are true and R is the correct explanation of A.
D. Both A and R are true but R is not the correct explanation of A.

Correct Answer: Option B


Explanation:
A is false because no interest on capital is allowed without agreement. R is true.

Question #2
The 'Cost of Control' (Goodwill) arises on consolidation when:
A. Subsidiary makes loss
B. Parent company pays less
C. Net assets are more than purchase consideration
D. Purchase consideration is more than net assets acquired

Correct Answer: Option D


Explanation:
Goodwill on consolidation arises when cost of investment exceeds the fair value of net assets of subsidiary.

Question #3
S1: Under Ind AS 115, if a contract contains multiple performance obligations, the transaction price must be allocated to each obligation based on their relative standalone selling prices. S2: If the standalone selling price is not directly observable, the entity must estimate it using the adjusted market assessment approach or the expected cost plus a margin approach. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S1 only
C. S2 only
D. Both S1 and S2

Correct Answer: Option D


Explanation:
Both statements are correct as per Ind AS 115. The transaction price must be allocated based on standalone selling prices, and if not directly observable, the entity must estimate it using approved methods like adjusted market assessment or expected cost plus margin.