Page 13 - 2018 FAC4864 Test 4 slides - Borrowing Costs & IFRS 5

BORROWING COSTS

Period upon which capitalisation should take

place

• Suspension of capitalisation

• Capitalisation of borrowing costs should be suspended

during extended periods in which active development is

interrupted.

• This does not apply during periods when substantial

technical and administrative work is being carried out,

or when a temporary delay is a necessary part of the

process of getting an asset ready for its intended use or

sale.

• A general rule of thumb would be to test whether the

events can be controlled by management or are beyond

the control of management.

13