SUMMARY: ACCOUNTING BORROWING COSTS (IAS23)

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SUMMARY: BORROWING COSTS (IAS23)


1. INTRODUCTION


IAS 23 states that, an entity shall capitalise borrowing cost that are directly attributable to the
acquisition, construction or production of a qualifying asset as part of the cost of that asset.
An entity shall recognise other borrowing costs as an expense in the period in which it is incurred.




2. OBJECTIVES/ OUTCOMES


What you need to achieve in this study unit:


 Define borrowing costs and identify qualifying assets.


 Determine commencement of capitalisation of borrowing costs and when should it be
suspended or cease.


 Determine the amount of borrowing costs that should be capitalised.


 Identify taxation implications with regards to the capitalised borrowing costs.


 Presentation and disclosure of borrowing costs in the relevant annual financial
statements.




3. CONCEPTUAL FRAMEWORK


a. Definitions.


b. Recognition criteria.


c. Measurement of elements of financial statement and disclosure.
SUMMARY: BORROWING COSTS (IAS23)