PAS 23 BORROWING COST

I. NATURE
Borrowing cost that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalized as cos of that asset. Other borrowing costs are
expensed when incurred.
Borrowing cost (interest or finance cost) are cost incurred in relation to the borrowing of
funds. Example, interest expense on financial liabilities and exchange differences on
foreign borrowings.
Qualifying asset is an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale.
II. RECOGNITION
Capitalization of borrowing costs starts when all of the following conditions are met:
a. Expenditures for the asset are being incurred
b. Borrowing costs are being incurred
c. Activities necessary to prepare the asset for its intended use or sale are being
undertaken

III. DISCLOSURE
a. The amount of borrowing costs capitalized during the period.
b. The capitalization rate used to determine the capitalizable borrowing costs.