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Under AS 10, is interest paid to a supplier for deferred credit on the purchase of a plant capitalised as part of the plant's cost?
AYes, it is always capitalised as a directly attributable cost
BYes, but only up to 10% of the invoice value
CNo, it is a finance cost and is not capitalised as plant cost
DNo, it is added to inventory instead
Answer & Solution
Correct answer: C. No, it is a finance cost and is not capitalised as plant cost
1. AS 10 capitalises the cash-price equivalent purchase price plus directly attributable costs.
2. Interest for deferred credit is a financing element, not a cost of bringing the asset to working condition.
3. It is recognised as a finance cost and excluded from the capitalised cost of the plant.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 MCQ — Q.9, AS 10 Property, Plant & Equipment._
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