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Reader Comments on ::   Preparation of Profit or Loss Statement during the project phase
If the case is where entity has borrowed a money specifically for a project to construct a building, the borrowing cost must be
capitalized. An entity should begin capitalizing borrowing costs on the commencement date. Three conditions must be met before the capitalization period should begin:
1. Expenditures for the asset are being incurred;
2. Borrowing costs are being incurred; and
3. Activities that are necessary to prepare the asset for its intended use are in progress.
As long as these conditions continue, borrowing costs can be capitalized.

The exchange differences arising from foreign currency borrowings to the extent they are treated as an adjustment to interest costs must also be capitalized. For detail BAS 23 may be refered.
Posted By: Tshechu      Posted on: 2018-05-15 11:57:13
In the construction period, the company has not yet started business. The P&L will have nothing in it.
Accounting Standards give rules on the treatment for various situations. If my company is affected by that situation, I have to follow the rules in the standard. If the situation doesn't apply the standard is irrelevant.
I worked for the NPPF which is exempt from tax. The NPPF isn't required to present copious Notes on tax which are totally blank.
In the same way, a company in the construction stage hasn't got income and expenses, so a P&L doesn't need to be shown
Posted By: Roy Whittington      Posted on: 2018-05-15 11:57:13
During the project construction phase are we required to prepare Profit or Loss Statement or all the expense and incomes are required to be capitalized and moreover as per BAS 21 The Effects of Changes in Foreign Exchange Rates , para 28 , exchange difference are required to be recognized in profit or loss , so during the project construction phase if there are any exchange differences where do we account them , as P&L item as adjustment in BS.
Posted By: Sonam Choeden      Posted on: 2018-05-15 11:57:13

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