Page 14 - 2018 FAC4864 Test 4 slides - Borrowing Costs & IFRS 5
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BORROWING COSTS
Period upon which capitalisation should take
place
• Cessation of capitalisation
• Capitalisation of borrowing costs should cease when
substantially all the activities necessary to prepare the
qualifying asset for its intended use or sale have been
completed. In other words: when the asset is ready for its
intended use or sale.
• When the construction of an asset is completed in parts and
each part is capable of being used while construction
continues on other parts, capitalisation of borrowing costs on
that part should cease when substantially all the activities
necessary to prepare that part for its intended use or sale are
completed. If all parts are needed before the asset can be
used or sold, capitalisation takes place until the asset as a
whole is completed.
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