IND AS 23 | Necessarily Takes | Understanding Qualifying Assets: It’s About Necessity, Not Delay

Tell me, what do we call a qualifying asset? Yes. 'If an asset necessarily takes more than 12 months to get ready for its intended use, we call it a qualifying asset' So, if I buy a car and bring it home, is that a qualifying asset? No, because the very day I bought it, it was already ready to be put to use Things like an air conditioner or a car are not qualifying assets But let's look at a building. The rule says that if an asset necessarily takes more than one year... Let's focus on 'necessarily takes more than one year.' What if, normally, an asset only takes 3 months for construction, but I'm a laid-back, lazy guy and I took my sweet time getting it built—let's say I stretched it out and took 15 months to make it Would you call this a qualifying asset? No, you wouldn't Did the asset actually require more than 12 months to get ready, or did I stretch it past 12 months because of my own laziness? I'm the one who dragged it out, right? Are you getting what I'm saying? An asset is a qualifying asset if it takes... or rather, if it necessarily takes a substantial period of time to get constructed How much time we decide to take is not important. How much time the asset inherently requires to be ready is what's important." #QualifyingAsset #Accounting #Finance #AssetConstruction #IntendedUse #AccountingRules #FinanceEducation #BusinessConcepts