Page 13 - PowerPoint Presentation

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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