Explanation:
Secret reserves are created by undervaluing assets or overvaluing liabilities, which reduces reported profits and hides the true financial position.
Assertion (A): Under Ind AS 23, borrowing costs directly attributable to the acquisition of a qualifying asset must be capitalized. Reason (R): A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. Choose the correct option.
A.A is false but R is true
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Ind AS 23 requires capitalization of borrowing costs for qualifying assets. A qualifying asset is defined precisely as one that takes a substantial period to be ready for use or sale. R correctly defines the term and explains the basis for capitalization.
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