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Hi Crish, I hope you are good. I had a question about borrowing costs. What if for some reason out investment income is higher than borrowing cost from “the investment of borrowed money”.
How do we treat it then ? i will guess there will be no borrowing cost to be capitalised but what bout the excess ? will we need to treat the excess of investment income over the borrowing costs as ‘Accumulated depreciation’ to decapitalise it Or is it something treated completely differently ?
Hi,
That is not going to arise in the real world. The cost of borrowing is always going to be higher than the interest received on bank deposits.
If you find anywhere that has a higher rate on bank deposits then please let me know so that I can borrow lots and then deposit the cash to make plenty of money 😉
Thanks
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