Interest paid on loan taken for purchase of asset should be debited to.? A) Interest A/c B)Asset A/c C)Profit & Loss A/c D) Trading A/c

Directly to the particular Asset account

Asset a/c

This is covered by the standard ,:Borrowing cost..Interest incurred until the capital asset is brought to effective use as asset

.After the asset is put to use ,to be treated as interest account.

Yes it should be asset account

The interest shall be debited to Asset account ONLY when the asset is Qualifying asset in terms of IAS23 Borrowinng Costs otherwise the interest cost shall be expensed out throug profit and loss.

If we are purchase by directly it shoud be showing in Assets A/c

some time we are tacken from bank or other invements it shoud be showing in intrest accounts.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset and, therefore, should be capitalised.

PROFIT & LOSS A/C