BORROWING COSTS Definition

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BORROWING COSTS is the financial costs incurred by an enterprise in connection with the borrowing of funds, i.e. interest, amortization of discounts or premiums arising on the issue of debt securities, loan fees, gains and losses on foreign currency differences related to borrowed funds and regarded as an adjustment to interest costs.

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BASIC TENETS OF ACCOUNTING is four in number: 1. Assets = Liabilities + Owners Equity, 2. Debits = Credits, 3. Assets are on the left (debit side), and, 4. Liabilities and Equity are on the right (credit side).

CONTINGENT LIABILITY is: (a) A possible obligation from past events that will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or (b) A present obligation from past events but is not recognized because (i) it is not probable that an outflow of resources will be required to settle the obligation; or (ii) the obligation cannot be measured reliably. Some examples: in corporate reports are pending lawsuits, judgments under appeal, disputed claims, and the like, representing potential financial liability.

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