International Accounting Standard (IAS) 23 «Borrowing Costs»

CONTENTS

paragraphs

INTERNATIONAL ACCOUNTING STANDARD 23

BORROWING COSTS

OBJECTIVE

SCOPE

1-3

DEFINITIONS

4-6

BORROWING COSTS - BENCHMARK TREATMENT

7-9

Recognition

7-8

Disclosure

9

BORROWING COSTS - ALLOWED ALTERNATIVE TREATMENT

10-28

Recognition

10-28

Borrowing costs eligible for capitalisation

13-18

Excess of the carrying amount of the qualifying asset over recoverable amount

19

Commencement of capitalisation

20-22

Suspension of capitalisation

23-24

Cessation of capitalisation

25-28

DISCLOSURE

29

TRANSITIONAL PROVISIONS

30

EFFECTIVE DATE

31

International Accounting Standard 23 Borrowing Costs (IAS 23) is set out in paragraphs 1-31. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 23 should be read in the context of its objective, the Preface to International Financial Reporting Standards and the Framework for the Preparation and Presentation of Financial Statements. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.

International Accounting Standard 23

Borrowing Costs

Objective

The objective of this Standard is to prescribe the accounting treatment for borrowing costs. This Standard generally requires the immediate expensing of borrowing costs. However, the Standard permits, as an allowed alternative treatment, the capitalisation of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

Scope

l

This Standard shall be applied in accounting for borrowing costs.

2

This Standard supersedes IAS 23 Capitalisation of Borrowing Costs approved in 1983.

3

This Standard does not deal with the actual or imputed cost of equity, including preferred capital not classified as a liability.

Definitions

4

The following terms are used in this Standard with the meanings specified:

Borrowing costs are interest and other costs incurred by an entity in connection with the borrowing of funds.

A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

5

Borrowing costs may include:

(a)

interest on bank overdrafts and short-term and long-term borrowings;

(b)

amortisation of discounts or premiums relating to borrowings;

(c)

amortisation of ancillary costs incurred in connection with the arrangement of borrowings;

(d)