IAS -23 Borrowing Cost
Definition Borrowing costs are defined as 'interest and other costs that an entity incurs in connection
with the borrowing of fund
Qualifying asset
A qualifying asset as one that takes a
substantial period of time to get ready for its
intended use or sale.
Accounting Treatment
Charge to P&L account as finance cost capitalized as a part of asset cost
Recognition Criteria to capitalize borrowing cost
Interest must be directly attributable for the
acquisition, construction or production of a
qualifying asset.
Capitalization period
Capitalization should commence Suspension period Cessation date
When Period in which active Capitalization should cease when
• expenditure is being development is interrupted
incurred.
• borrowing costs are being substantially all the activities that
incurred. are necessary to prepare for its
• activity that are necessary P&L intended use or sale are complete.
to prepare the asset for its
intended use or sale are in
progress.
Definition Borrowing costs are defined as 'interest and other costs that an entity incurs in connection
with the borrowing of fund
Qualifying asset
A qualifying asset as one that takes a
substantial period of time to get ready for its
intended use or sale.
Accounting Treatment
Charge to P&L account as finance cost capitalized as a part of asset cost
Recognition Criteria to capitalize borrowing cost
Interest must be directly attributable for the
acquisition, construction or production of a
qualifying asset.
Capitalization period
Capitalization should commence Suspension period Cessation date
When Period in which active Capitalization should cease when
• expenditure is being development is interrupted
incurred.
• borrowing costs are being substantially all the activities that
incurred. are necessary to prepare for its
• activity that are necessary P&L intended use or sale are complete.
to prepare the asset for its
intended use or sale are in
progress.
