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FAR14. Borrowing Costs
FAR14. Borrowing Costs
Borrowing Costs
Definition:
Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of
funds.
If these three conditions are met, then that is the commencement date. Capitalize the borrowing costs
starting on this date up to the time when activities are substantially complete.
1. It incurs expenditures for the asset
2. It incurs borrowing costs
3. It undertakes activities that are necessary to prepare the asset for its intended use or sale.
DISCLOSURE
a. Accounting policy adopted for borrowing costs
b. Amount of borrowing costs capitalized during the period
c. Capitalization rate used to determine the amount of borrowing costs eligible for capitalization