IAS 23 Flashcards
What does IAS 23 cover?
It covers Borrowing Costs ie loan interest
Where do Borrowing Costs normally go in the FS?
They are shown as a finance cost that goes to the P and L
How do we account for borrowing costs used for the construction of a qualifying asset?
The loan cost (interest) during the construction period is part of the cost of the asset.
Include it in the original asset cost on SOFP
What is a qualifying asset?
It is an asset that necessarily takes an extended period of time to get ready for use or sale
What should the costs be in order to acquire an asset?
The costs should be directly related to the cost of acquiring the benefits from the asset. They should be necessary and efficient
What do we do with the borrowing costs AFTER the asset is constructed?
Expense them to the P and L
During idle periods expense borrowing costs to the P and L
What is the scenario with temporary surplus funds?
We are going to be incurring a borrowing cost, and we will also have a surplus from investing.
We will receive deposit interest on these surplus funds
We offset the deposit against the loan interest cost - the net figure is what we account for
What do we do once activity commences on an asset? Eg we break ground
Once activity we debit the asset
Activity : Asset
How do we treat loans in the fs?
Loans are regarded as financial liabilities and should be held at amortised cost
When are borrowing costs capitalised?
Borrowing costs are capitalised if they are directly attributable to qualifying assets - which are assets that take a substantial time to complete
