9.

102 FINANCIAL REPORTING

UNIT 4 :
INDIAN ACCOUNTING STANDARD 23 :
BORROWING COSTS

LEARNING OUTCOMES

After studying this unit, you will be able to:

 Appreciate the core principle and scope of this standard
 Define borrowing cost, qualifying asset and other related terms
 Recognise various conditions and pre-conditions for capitalisation of
borrowing costs
 Evaluate suspension and cessation of capitalization of such borrowing cost
 Comply with the disclosure requirements of the standard
 Differentiate between Ind AS 23 and AS 16.

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 INDIAN ACCOUNTING STANDARD 23 9.103

UNIT OVERVIEW

Core Principle
Capitalisation of borrowing
costs that are directly
attributable to the acquisition,
construction or production of a
qualifying asset.

Scope - exclusions
• qualifying asset measured at
fair value
Disclosures • inventories produced in large
quantities
• actual or imputed cost of
equity

Borrowing costs eligible for

Period of capitalisation: capitalisaion
Commencement • Specific borrowings
Suspension • General borrowings
Cessation • Calculation of capitalisation
rate

4.1 CORE PRINCIPLE

This standard requires borrowing costs that are directly attributable to the acquisition, construction
or production of a qualifying asset are included in the cost of that asset. Other borrowing costs are
recognised as an expense.

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“Borrowing costs’ that are directly

attributable to the acquisition, construction
or production of a qualifying asset form
part of the cost of that asset.

Other borrowing costs are recognised as an

expense.

4.2 SCOPE
 An entity shall apply this standard in accounting for borrowing costs.
 The Standard does not apply to actual or imputed cost of equity, including preferred capital not
classified as a liability.
For example: Dividend paid on equity shares, cost of issuance of equity, cost on
Irredeemable preference share capital will not be included as borrowing cost within
the purview of this standard.

 An entity is not required to apply the Standard to borrowing costs directly attributable to the
acquisition, construction or production of:
(a) a qualifying asset measured at fair value, for example, a biological asset accounted for
under Ind AS 41; or
(b) inventories that are manufactured, or otherwise produced, in large quantities on a
repetitive basis. and that take a substantial period to get ready for sale. For example,
whisky, wines etc. takes substantial period of time, may be years to get ready for the
intended purpose are out of scope from the purview of this standard.

4.3 RELEVANT DEFINITIONS

 Borrowing Cost and Qualifying asset are the two key pillars of this standard. In reference to
this standard, borrowing cost states what needs to be capitalised and qualifying asset states
on which asset these cost should be capitalised.
Let us see the definitions and inclusion of these two key words.
1. Borrowing costs are interest and other costs that an entity incurs in connection with the
borrowing of funds.

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2. A qualifying asset is an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale.
 Borrowing costs may include:
(a) interest expense calculated using the effective interest method as described in
Ind AS 109 Financial Instruments;
(b) finance charges in respect of finance leases recognised in accordance with Ind AS 17
Leases; and
(c) exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs.
4.3.1 Exchange difference to be included in borrowing costs
 With regard to exchange difference required to be treated as borrowing costs, the manner of
arriving at the adjustments stated therein should be as follows:
(i) the adjustment should be of an amount which is equivalent to the extent to which the
exchange loss does not exceed the difference between the cost of borrowing in functional
currency when compared to the cost of borrowing in a foreign currency.
Example :
An entity can borrow funds in its functional currency (`) @ 12%. It borrows $ 1,000 @
4% on April 1, 20X1 when $ 1 = ` 40. The equivalent amount in functional currency is
` 40,000. Interest is payable on March 31, 20X2. On March 31, 20X2, exchange rate
is $ 1 = ` 50. The loan is not due for repayment. The exchange loss in this case is `
10,000 [$ 1000 x (` 50- ` 40)]. The borrowing cost is ` 2,000
($ 1,000 x 4% x ` 50). Had the entity borrowed in functional currency the borrowing
cost would have been ` 4,800 (` 40,000 x 12%). The entity will treat exchange
difference upto ` 2,800 (` 4,800 – ` 2,000) as a borrowing cost that may be eligible
for capitalisation under this Standard. Thus the total eligible borrowing cost is
` 4,800 (` 2,000 + ` 2,800) equivalent to the cost of borrowing cost in functional
currency.
If the exchange rate on March 31, 20X2, is $ 1 = ` 41. The exchange loss is
` 1,000 [$ 1,000 – (` 41 – ` 40)]. The entity will treat the entire exchange loss as an
eligible borrowing cost as total cost of the borrowing ` 2,640 [(` 1,000 x 4% x 41) + `
1,000] in foreign currency does not exceed the cost of borrowings in functional
currency, i.e., ` 4,800.
(ii) where there is an unrealised exchange loss which is treated as an adjustment to interest
and subsequently there is a realised or unrealised gain in respect of the settlement or
translation of the same borrowing, the gain to the extent of the loss previously recognised
as an adjustment should also be recognised as an adjustment to interest.

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Example : Continuing with the aforesaid example:

If the exchange rate on March 31, 20X3, is $ 1 = ` 48; the exchange rate on
March 31, 20X2, being $ 1= ` 50, the borrowings are still not due for payment. The
entity will recognise a borrowing cost of ` 1,920 ($ 1,000 x 4% x ` 48). There is an
exchange gain of ` 2,000 ($ 1,000 x (` 50 – `48). This will be adjusted in the borrowing
cost as there is unrealised exchange loss and the adjustment is less than the exchange
loss of ` 2,800 recognised in earlier year.
If the exchange rate on March 31, 20X3, is $ 1 = ` 44; the exchange rate on
March 31, 20X2, being $ 1 = ` 50, the borrowings are still not due for payment. The
entity will recognise a borrowing cost of ` 1,760 ($ 1,000 x 4% x ` 44). There is an
exchange gain of ` 6,000 [$ 1,000 x (` 50 – ` 44)]. This will be adjusted in the borrowing
cost upto ` 2,800 as there is unrealised exchange loss and the adjustment of the
exchange loss recognised in earlier years is of ` 2,800.
If the exchange rate on March 31, 20X3, is $ 1 = ` 44 and part of loan is repaid;
the exchange rate on March 31, 20X2, being $ 1 = ` 50; $ 600 of the borrowings was
paid on March 31, 20X2, $ 400 of the borrowings are still not due for payment. The
entity will recognise a borrowing cost of ` 704 ($ 400 x 4% x ` 44). There is an
exchange gain of ` 2400 [$ 400 x (` 50 – ` 44)]. The unrealised exchange loss of
earlier year is ` 4,000 [$ 400 x (` 50 – ` 40)] out of which ` 1,120 (` 2,800 x $ 400 / $
1000) was charged in March 31, 20X1, as borrowing cost. Thus there will be an
adjustment in the borrowing cost upto ` 1,120 as this is unrealised exchange loss.
Illustration 1
ABC Ltd. has taken a loan of USD 20,000 on April 1, 20X1 for constructing a plant at an interest rate
of 5% per annum payable on annual basis.
On April 1, 20X1, the exchange rate between the currencies i.e USD vs Rupees was ` 45 per USD.
The exchange rate on the reporting date i.e March 31, 20X2 is ` 48 per USD.
The corresponding amount could have been borrowed by ABC Ltd from State bank of India in local
currency at an interest rate of 11% per annum as on April 1, 20X1.
Compute the borrowing cost to be capitalized for the construction of plant by ABC Ltd.
Solution
In the above situation, the Borrowing cost needs to determine for interest cost on such foreign
currency loan and eligible exchange loss difference if any.
(a) Interest on Foreign currency loan for the period :
USD 20,000 x 5% = USD 1,000
Converted in ` : USD 1,000 x ` 48/USD = ` 48,000

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 INDIAN ACCOUNTING STANDARD 23 9.107

Increase in liability due to change in exchange difference : USD 20,000 x (48 - 45) = ` 60,000
(b) Interest that would have resulted if the loan was taken in Indian Currency:
USD 20,000 x ` 45/USD x 11% = ` 99,000
(c) Difference between Interest on Foreign Currency borrowing and local Currency borrowing :
` 99,000 - 48,000 = ` 51,000
Hence, out of Exchange loss of ` 60,000 on principal amount of foreign currency loan, only exchange
loss to the extent of ` 51,000 is considered as borrowing costs.
Total borrowing cost to be capitalized is as under :
(a) Interest cost on borrowing ` 48,000

(b) Exchange difference to the extent considered to be

an adjustment to Interest cost ` 51,000
` 99,000
The exchange difference of ` 51,000 has been capitalized as borrowing cost and the remaining
` 9,000 will be expensed off in the Statement of Profit and loss.
*****
4.3.2 Key Note on Qualifying Assets
Depending on the circumstances, any of the following may be qualifying assets:
(a) inventories
(b) manufacturing plants
(c) power generation facilities
(d) intangible assets
(e) investment properties

(f) bearer plants.

 Financial assets and inventories that are manufactured, or otherwise produced, over a short
period of time, are not qualifying assets. Assets that are ready for their intended use or sale
when acquired are not qualifying assets.

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4.4 RECOGNITION
 Borrowing costs that are directly attributable to the acquisition, construction or production of
a qualifying asset are capitalised as part of the cost of the qualifying asset. Such borrowing
cost are capitalised when below two conditions will be satisfied:
- when it is probable it will result in future economic benefits to the entity; and
- the costs can be measured reliably.

 Other borrowing costs are recognisied as an expense in the period in which they are incurred.
 When an entity applies Ind AS 29 Financial Reporting in Hyperinflationary Economies, it
recognises as an expense the part of borrowing costs that compensates for inflation during
the same period.

4.4.1 Borrowing costs eligible for capitalisation

The borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are those borrowing costs that would have been avoided if the expenditure on the
qualifying asset had not been made.
4.4.1.1 Specific borrowing costs
 When an entity borrows funds specifically for the purpose of obtaining a qualifying asset, the
entity should determine the amount of borrowing costs eligible for capitalisation as the actual
borrowing costs incurred on that borrowing during the period less any investment income on
the temporary investment of those borrowings.
 The financing arrangements for a qualifying asset may result in an entity obtaining borrowed
funds and incurring associated borrowing costs before some or all of the funds are used for
expenditures on the qualifying asset. In such circumstances, the funds are often temporarily
invested pending their expenditure on the qualifying asset. In determining the amount of
borrowing costs eligible for capitalisation during a period, any investment income earned on
such funds is deducted from the borrowing costs incurred.

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 INDIAN ACCOUNTING STANDARD 23 9.109

Funds are borrowed

specifically

Actual borrowing cost

incurred less any income
on temporary investment
of borrowed funds

Illustration 2
Alpha Ltd. on 1st April, 20X1 borrowed 9% ` 30,00,000 to finance the construction of two qualifying
assets. Construction started on 1st April, 20X1. The loan facility was availed on 1st April, 20X1 and
was utilized as follows with remaining funds invested temporarily at 7%.
Factory Building Office Building
1st
April, 20X1 5,00,000 10,00,000
1 October, 20X1
st 5,00,000 10,00,000
Calculate the cost of the asset and the borrowing cost to be capitalized.

Solution:

Particulars Factory Building Office Building

Borrowing Costs (10,00,000 x 9%) 90,000 (20,00,000 x 9%) 1,80,000
Less: Investment Income (5,00,000 x 7% x 6/12) (10,00,000 x 7% x 6/12)
(17,500) (35,000)
72,500 1,45,000
Cost of the asset:
Expenditure incurred 10,00,000 20,00,000
Borrowing Costs 72,500 1,45,000
Total 10,72,500 21,45,000

*****

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4.4.1.2 General borrowing costs

 When a qualifying asset is funded from a pool of general borrowings, the amount of the
borrowing costs eligible for capitalisation is not so obvious. It may be difficult to identify a direct
relationship between particular borrowings and a qualifying asset and to determine the
borrowings that could otherwise have been avoided.
 Such a difficulty occurs, for example, when the financing activity of an entity is coordinated
centrally. Difficulties also arise when a group uses a range of debt instruments to borrow funds
at varying rates of interest, and lends those funds on various bases to other entities in the
group.
4.4.2 Calculation of capitalisation rate
 To the extent that an entity borrows funds generally and uses them for the purpose of obtaining
a qualifying asset, the entity shall determine the amount of borrowing costs eligible for
capitalisation by applying a capitalisation rate to the expenditures on that asset.
 The capitalisation rate is the weighted average of the borrowing costs applicable to the
borrowings of the entity that are outstanding during the period, other than borrowings made
specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that
an entity capitalises during a period shall not exceed the amount of borrowing costs it incurred
during that period.

Weighted
Total general average total
borrowing costs general
Capitalisation
for the period borrowings
rate
(excluding specific (excluding
borrowings) specific
borrowings)

Illustration 3
Beta Ltd had the following loans in place at the end of 31 st March, 20X2:
(Amounts in ` 000s)
Loan 1st April, 20X1 31st March, 20X2
18% Bank Loan 1,000 1,000
16% Term Loan 3,000 3,000
14% Debentures - 2,000
14% debenture was issued to fund the construction of Office building on 1 st July, 20X1 but the
development activities has yet to be started.

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 INDIAN ACCOUNTING STANDARD 23 9.111

On 1st April, 20X1, Beta ltd began the construction of a Plant being qualifying asset using the
existing borrowings. Expenditure drawn down for the construction was: Rs 500,000 on
1st April, 20X1 and Rs 2,500,000 on 1st January, 20X2.
Required
Calculate the borrowing cost that can be capitalised for the plant.

Solution
Capitalisation rate (18% x 1,000) (16% x 3,000) 16.5%
+
1,000 + 3,000 1,000 + 3,000

Borrowing Costs (500,000 x 16.5%)+(2,500,000 x16.5% x 3/12) ` 1,85,625

*****
4.4.3 Expenditure to which capitalisation rate is applied
 In calculation of borrowing costs to be capitalised, the amount of expenditure on a qualifying
asset include only those expenditures that have resulted in payments of cash, transfers of other
assets or the assumption of interest-bearing liabilities.
 Expenditures are reduced by any progress payments received and grants received in
connection with the asset (see Ind AS 20 Accounting for Government Grants and Disclosure of
Government Assistance).
 The average carrying amount of the asset during a period, including borrowing costs previously
capitalised, is normally a reasonable approximation of the expenditures to which the
capitalisation rate is applied in that period.
4.4.4 Excess of the carrying amount over recoverable amount
When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its
recoverable amount or net realisable value, the carrying amount is written down or written off in
accordance with the requirements of other Standards. In certain circumstances, the amount of the
write-down or write-off is written back in accordance with those other Standards.

4.5 PERIOD OF CAPITALISATION

4.5.1 Commencement of capitalisation
 An entity is required to begin the capitalizing of borrowing costs as part of the cost of a
qualifying asset on the commencement date. The commencement date for capitalisation is the
date when the entity first meets all of the following conditions cumulatively on a particular date:

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(a) it incurs expenditures for the asset;

(b) it incurs borrowing costs; and
(c) it undertakes activities that are necessary to prepare the asset for its intended use or sale.

Expenditures for the asset Borrowing costs is incurred Activities that are necessary
is incurred to prepare the asset for its
intended use or sale

Explanation to the three conditions for commencement date

 Expenditures on a qualifying asset include:
- Those expenditures that have resulted in payments of cash
- transfers of other assets
- assumption of interest bearing liabilities
Expenditures are reduced by any progress payments received and grants received in
connection with the asset.
 Activities necessary to prepare asset for its intended use or sale:
- Includes technical and administrative work prior to the commencement of physical
construction, such as the activities associated with obtaining permits prior to the
commencement of the physical construction.
- exclude the holding of an asset when no production or development that changes the
asset’s condition is taking place.
For example, borrowing costs incurred while land is under development are capitalised during
the period in which activities related to the development are being undertaken. However,
borrowing costs incurred while land acquired for building purposes is held without any
associated development activity do not qualify for capitalisation.
Illustration 4 : Commencement Date
X Ltd is commencing a new construction project, which is to be financed by borrowing. The key
dates are as follows:
(i) 15th May, 20X1: Loan interest relating to the project starts to be incurred

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(ii) 2nd June, 20X1 : Technical site planning commences

(iii) 19th June, 20X1 : Expenditure on the project started to be incurred
(iv) 18th July, 20X1 : Construction work commences
Identify commencement date.
Solution
In the above case, the three conditions to be tested for commencement date would be:
Borrowing cost has been incurred on : 15th May, 20X1
Expenditure has been incurred for the asset on : 19 th June, 20X1
Activities necessary to prepare asset for its intended use or sale: 2nd June, 20X1
Commencement date would be the date when the above three conditions would be satisfied in all
i.e 19th June, 20X1
*****
4.5.2 Suspension of capitalisation
 An entity is required to suspend the capitalisation of borrowing costs during extended periods
in which it suspends active development of a qualifying asset. Such costs are costs of holding
partially completed assets and do not qualify for capitalisation.
 An entity does not required to suspend capitalising borrowing costs when a temporary delay is
a necessary part of the process of getting an asset ready for its intended use or sale. For
example, capitalisation continues during the extended period that high water levels delay
construction of a bridge, if such high water levels are common during the construction period
in the geographical region involved.
Example: Suspension of Capitalisation
(a) Construction suspended between October, 20X1 to January, 20X2 during which
period certain heavy construction equipment under use was shifted to another site.
In this case, capitalization of borrowing costs needs to be suspended since active
development is interrupted.
(b) When Qualifying Asset construction is about to complete, there was temporary delay
of 20 days on account of some technical reasons.
In this case, capitalization of borrowing costs shall be continued.

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4.5.3 Cessation of capitalisation

 An entity should cease capitalising borrowing costs when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are complete.
 An asset is normally ready for its intended use or sale when the physical construction of the
asset is complete even though routine administrative work might still continue. If minor
modifications, such as the decoration of a property to the purchaser’s or user’s specification,
are all that are outstanding, this indicates that substantially all the activities are complete.
 When an entity completes the construction of a qualifying asset in parts and each part is
capable of being used while construction continues on other parts, the entity shall cease
capitalising borrowing costs when it completes substantially all the activities necessary to
prepare that part for its intended use or sale.
 A business park comprising several buildings, each of which can be used individually, is an
example of a qualifying asset for which each part is capable of being usable while construction
continues on other parts.
An example of a qualifying asset that needs to be complete before any part can be used is an
industrial plant involving several processes which are carried out in sequence at different parts
of the plant within the same site, such as a steel mill.
Example:
H Limited, a real estate company, gives immovable property on rent. It has completed on May
31, 20X1, a commercial complex consisting of various offices that could be rented out. It
expects that the commercial complex will be completely rented out by June 30, 20X1. However,
due to adverse market conditions, only 10% of the commercial complex could be rented out by
its reporting date of March 31, 20X2. H Limited wants to capitalise the eligible borrowing costs
incurred up to March 31, 20X2.
H Limited should capitalise borrowing costs only up to May 31, 20X1. The borrowing cost
incurred thereafter cannot be capitalised as the asset was ready for its intended use on May
31, 20X1. The fact that only a small portion could be rented out by March 31, 20X2, is
immaterial.
Example:
An entertainment park consisting of several rides and facilities, each of which can be used
individually, is an example of a qualifying asset for which each part is capable of being usable
while construction continues on other parts. On the other side in a case of an industrial
undertaking such as a steel mill, all parts have to be completed before any earlier completed
part can be put to use.

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4.6 DISCLOSURE
Entities are required to disclose:
(a) the amount of borrowing costs capitalised during the period; and
(b) the capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation.

4.7 SIGNIFICANT DIFFERENCES IN IND AS 23 VIS-À-VIS

AS 16
S. Particular Ind AS 23 AS 16
No.
1. Qualifying Asset Ind AS 23 does not require an AS 16 does not provide for
measured at Fair entity to apply this standard to such scope relaxation
Value borrowing costs directly
attributable to the acquisition,
construction or production of a
qualifying asset measured at fair
value, for example, a biological
asset
2. Applicability to Ind AS 23 excludes the application AS 16 does not provide for
Inventories of this Standard to borrowing costs such scope relaxation and
directly attributable to the is applicable to borrowing
acquisition, construction or costs related to all
production of inventories that are inventories that require
manufactured, or otherwise substantial period of time to
produced, in large quantities on a bring them in saleable
repetitive basis condition
3. Inclusion as Ind AS 23 requires to calculate the AS 16, Borrowing Costs,
Borrowing Costs interest expense using the inter alia, include the
effective interest rate method as following:
described in Ind AS 109. Certain • interest and
items therein have been deleted, commitment charges on
as some of those components of bank borrowings and other
borrowing costs are considered as short-term and long-term
the components of interest borrowings;
expense calculated using the
effective interest rate method. • amortisation of
discounts or premiums
relating to borrowings;

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• amortisation of
ancillary costs incurred in
connection with the
arrangement of borrowings
4. Explanation of This explanation is not included in AS 16 gives explanation for
Substantial Period of Ind AS 23. meaning of ‘substantial
Time period of time’ appearing in
the definition of the term
‘qualifying asset’.
5. Reporting in Ind AS 23 provides that when Ind AS 16 does not contain a
Hyperinflationary AS 29, ‘Financial Reporting in similar clarification because
Economies Hyperinflationary Economies’, is at present, in India, there is
applied, part of the borrowing costs no Standard on ‘Financial
that compensates for inflation Reporting in
should be expensed as required by Hyperinflationary
that Standard (and not capitalized Economies’.
in respect of qualifying assets).

6. Borrowings of the Ind AS 23 specifically provides that This specific provision is not
Parent and its in some circumstances, it is there in AS 16.
Subsidiaries for appropriate to include all
Computing Weighted borrowings of the parent and its
Average subsidiaries when computing a
weighted average of the borrowing
costs while in other circumstances,
it is appropriate for each subsidiary
to use a weighted average of the
borrowing costs applicable to its
own borrowings.
7. Disclosure of Ind AS 23 requires disclosure of AS 16 does not have this
Capitalisation Rate capitalization rate used to disclosure requirement.
determine the amount of borrowing
costs eligible for capitalization.

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TEST YOUR KNOWLEDGE

Questions
1. Marine Transport Limited ordered 3 ships for its fleet on April 1, 20X0. It pays a down payment
of 25% of the contract value of each of the ship out of long term borrowings from a scheduled
bank. The delivery has to commence from the financial year 20X7. On
March 1, 20X2, the ship builder informs that it has commenced production of one ship. There
is no progress on other 2 ships. Marine Transport Limited prepares its financial statements on
financial year basis.
Is it permissible for Marine Transport Limited to capitalise any borrowing costs for the financial
year ended March 31, 20X1 or March 31, 20X2.
2. X Limited has a treasury department that arranges funds for all the requirements of the
Company including funds for working capital and expansion programs. During the year ended
March 31, 20X2, the Company commenced the construction of a qualifying asset and incurred
the following expenses:
Date Amount (`)
July 1, 20X1 2,50,000
December 1, 20X1 3,00,000
The details of borrowings and interest thereon are as under:

Particulars Average Balance (`) Interest (`)

Long term loan @ 10% 10,00,000 1,00,000
Working capital loan 5,00,000 65,000
15,00,000 1,65,000
Compute the borrowing costs that need to be capitalised.
Answers
1. As per paragraph 5 of Ind AS 23, a qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
As per paragraph 17 of Ind AS 23, an entity shall begin capitalising borrowing costs as part of
the cost of a qualifying asset on the commencement date. The commencement date for
capitalisation is the date when the entity first meets all of the following conditions:
(a) It incurs expenditures for the asset.
(b) It incurs borrowing costs.

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(c) It undertakes activities that are necessary to prepare the asset for its intended use or sale.
The ship is a qualifying asset as it takes substantial period of time for its construction.
Thus the related borrowing costs should be capitalised.
Marine Transport Limited borrows funds and incurs expenditures in the form of down payment
on April 1, 20X0. Thus condition (a) and (b) are met. However, condition (c) is met only on
March 1, 20X1, and that too only with respect to one ship. Thus there is no capitalisation of
borrowing costs during the financial year ended March 31, 20X1. Even during the financial year
ended March 31, 20X2, borrowing costs relating to the ‘one’ ship whose construction had
commenced from March 1, 20X2 will be capitalised from March 1, 20X2 to
March 31, 20X2. All other borrowing costs are expensed.
2. The capitalisation rate is:
Total borrowing costs / Weighted average total borrowings: 1,65,000/15,00,000 = 11% Interest
will be capitalised as under:
— On ` 2,50,000 @ 11% p.a. for 9 months = ` 20,625
— On ` 3,00,000 @ 11% p.a. for 4 months = ` 11,000

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