Page 12 - 2018 FAC4864 Test 4 slides - Borrowing Costs & IFRS 5

BORROWING COSTS

Period upon which capitalisation should take

place

• Commencement of capitalisation

• IAS 23 stipulates that the capitalisation of borrowing

costs as part of the cost of a qualifying asset should

commence when:

• expenditure for the asset is being incurred, and

• borrowing costs are being incurred, and

• activities that are necessary to prepare the asset for its

intended use or sale are in progress (even technical and
administrative work prior to actual construction, such as

obtaining council approval).

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