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International Accounting Standards-Training of Trainers

Capitalizable Borrowing Costs
PAS 23 Borrowing Costs (rev 2007)
PAS 23 Borrowing Costs

Borrowing costs
– Interest and other costs that an entity incurs in
connection with the borrowing of funds.
Qualifying asset
– An asset that necessarily takes a substantial
period of time to get ready for intended use or
sale
PAS 23 Borrowing Costs

– Expense, except to extent directly attributable

to the acquisition, construction or production of
a qualifying asset
– Capitalise into carrying amount of that
qualifying asset
Eligible borrowing costs

– To the extent funds are directly attributable,

actual costs less any investment income on
temporary investment of borrowings
– To the extent funds are borrowed generally,
apply the capitalisation rate
– Capitalisation rate = weighted average of the
borrowing costs outstanding during period
– Amount to be capitalised cannot exceed
borrowing costs incurred in period
PAS 23 Borrowing Costs

Commencement of capitalisation
– Expenditures on asset being incurred
– Borrowing costs are being incurred
– Activities necessary to prepare asset for its
intended use or sale are in progress
Suspension
– During extended periods when active
development is interrupted.
Cessation

– When substantially all activities

necessary to prepare asset for its intended
use or sale are complete
– Same applies if asset completed in parts
Disclosure

– Amount of borrowing costs capitalised during

period
– Capitalisation rate used to determine amount of
borrowing costs eligible for capitalisation