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Hi,
finance cost is normally treated as non manufacturing cost. but if it is mentioned that amount is borrowed for buying machinery which is used for production then how it will be classified?Remember interest is classified as finance cost because it is paid to the lender in return for money he has given the lender is loosing his value of money and opportunity cost of fund being invested elsewhere.. for the borrower the expenses incurred for whatever purpose are already classified rightly to where ever it pertains.. interest cost is the cost of buying money and selling money in future it will be classified always in finance cost..
only one exception is provided in ias if the asset for which the amount is borrowed meets the definition of qualifying asset as per ias 23 then the interest would not be expensed out rather it would be capitallized 🙂 hope u got the logic behind interest cost 🙂
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