Interest on loan for the period 1.12.2001 to 1.05.2002 is: Rs. 300 lakh 15/100 x 5/12 = Rs. 18.75 lakh As per AS 16: Borrowing Costs the above interest may be charged to Profit and Loss Account. Alternatively, it may be deferred for amortisation between, say, three to five years. It has been assumed that no other expenses are incurred on the machine during this period. Working Note: Let the Quoted Price = 'x' Less: Trade Discount 0.02.x. Actual Price = 0.98x Sales Tax @ 8% = 1.08 x 0.98x Rs. 370.44 lakh or = Rs. 350 lakh 1.08 x 0.98 Problem Prepare a segmental report for publication in Diversifiers Ltd. from the following details 1.19 of the company's three divisions and the head office: Rs. ('000) Forging Shop Division: Sales to Bright Bar Division 4,575 Other Domestic Sales 90 Export Sales 6,135 10,800 Bright Bar Division : Sales to Fitting Division 45 Export Sales to Rwanda 300 345 Fitting Division Export Sales to Maldives 270 933 Particulars Head office Forging Shop Division Rs. ('000) 240 72 Bright Bar Division Rs. ('000) Rs. ('000) Fitting Division Rs. ('000) (12) 36 30 36 8 Pre-tax Operating Result Head Office Cost Reallocated Interest Costs Fixed Assets Net Current Assets Long-term Liabilities 6 300 75 60 2 180 135 180 72 180 60 57 30 15