Which statement is true? * General borrowings may earn investment income deductible against general borrowing cost Capitalizable general borrowing cost is the total interest of all general borrowing costs Capitalizable general borrowing cost is the actual interest of all general borrowings less any investment income None of the above

Q: Define the term Deferred Loan Repayments?

A: Answer: A deferred loan payment is nothing but a loan agreement in which the borrower may start…

Q: Repurchase agreement is a collaterized borrowing. Is this true or false? Why?

A: Repurchase agreement is a collateralized borrowing because in this type of agreement the lender…

Q: Would you rather invest in: (compare and contrast) 1. Other Investment Assets 2. Alternatives to…

A: Investment refers to the process of investing funds in capital assets, financial securities, digital…

Q: Evaluate the following statements: S1. Capitalization of borrowing cost is mandatory for a…

A: As per IAS 23 "Borrowing cost", all the borrowing cost related to acquisition or construction or…

Q: Use IFRS 9 to determine how to subsequently measure the following financial assets.  Three choices…

A: No.ParticularsMeasurement of financial assets1Long-term loans that are held for collecting…

Q: Which payback method has a profit element?

A: Payback method is a capital budgeting technique which is used to evaluate various investment…

Q: Why What kind of stream of income does a debt security pay for the duration of the security? A fixed…

A: The Answer

Q: give the definition, recognition, measurement and derecognition of "borrowing cost"

A: A uniform group of principles, standards, and procedures that explain the basic financial accounting…

Q: NANGUTANG started constructing a building for its own use on January 1, 2020. NANGUTANG provided the…

A: Effective Rate of Interest= Total Amount of Interest/Total Amount of Loan 2500000/30000000=8.33%

Q: Which types of investments are valued at amortized cost? Explain the rationale for this accounting.

A:

Q: What is net operating working capital? Why does it exclude mostshort-term investments and notes…

A: Introduction: Working capital is the capital of company that is used in its day-to-day operational…

Q: lending

A: The term net lending is defined as an economic measure which measures as to whether the government…

Q: The borrowing cost to be capitalized in general borrowing cost is the lower between the amount…

A: General borrowing cost refers to the borrowing cost like interest expense, finance charges on the…

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: Evaluate in terms of the framework, why it is appropriate to capitalize borrowing costs under…

A: Borrowing prices are interest-associated alternative costs that an entity incurs in reference to…

Q: The discount rate used in a net present value analysis is the​ ________.   A. rate of interest…

A: Net present value is calculated by the deducting the present value of cash outflows from the present…

Q: What is the default classification for an equity investment? A  Fair value through profit or loss…

A: Answer:-  Equity investment meaning:- Equity investment is purchasing the shares directly from the…

Q: The capitalization rate used to determine the capitalizable borrowing cost should be disclosed.…

A: It is pertinent to note that as per IAS 23 borrowing costs incurred for acquisition, construction of…

Q: The sum of the principal and the interest on an investment is called the _____ value.

A: The sum of the principal and the interest on an investment is called the Maturity value.

Q: Debt investment are initially recorded at: Cost Cost plus accrued interest Fair value None of the…

A: Debt investment: Debt investment is investment in any firm or project in which you expect to receive…

Q: Evaluate in terms of the framework, why it is appropriate to capitalize borrowing costs under…

A: The accounting treatment of borrowing costs is governed by IFRS 9 Financial Instruments, which came…

Q: What do we call the cost that a borrower must payto use debt capital?

A: Debt capital is the capital that is borrowed from various financial institutions or other lenders…

Q: Is Collateralized debt obligation a good investment? Please explain in details.

A: A collateralized debt obligation also known as a CDO is a complex structured credit product which is…

Q: Which of the following case would allow the capitalization of  Interest Expense     No Case allows…

A: Interest will be capitalised only when the concerned assets is under preparation for its use in…

Q: Explain the effective lending rate (ELR) and how it is derived?

A: ELR is generally used to know the true cost of lending. This concept is useful when be borrow money…

Q: should we expect the flotation costs for debt to be significantly lower than those for equity

A: Flotation costs are the expenses incurred by a firm when it issues fresh stock. Flotation costs…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.