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Hi sir,
for this question , is it ok for me to mention about IAS 23 on the risk of management wrongly capitalize the interest into the specific new product development resulting into assets overstated and expenses understated…
I think that would be perfectly valid:
The scenario (as originally published) states:
3. A $20 million loan was taken out in January 2017, the cash being used to finance a specific new product development project.
The capitalisation of interest would in fact be a reason why the finance cost is less than expected (which is identified as a risk in the Q) – but, as you say, that capitalisation might be incorrect.
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