IAS 23 — Borrowing Costs

About

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Other borrowing costs are recognised as an expense. Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. IAS 23 provides guidance on how to measure borrowing costs, particularly when the costs of acquisition, construction or production are funded by an entity’s general borrowings.

What you should know

• Know and apply the definitions of borrowing costs and qualifying assets.
• Determine whether borrowing costs should be capitalised or expensed.
• Identify the date when capitalisation of borrowing costs begins.
• Determine when capitalisation of borrowing costs is suspended or ceases.
• Calculate borrowing costs eligible for capitalisation.
• Distinguish between specific borrowings and general borrowings.
• Present and disclose borrowing costs in the financial statements.