Ias 23

Question 1

Borrowing cost

Answer 1

Interest and other costs that an entity incurs in connection with the borrowing of funds

Question 2

Must be qualified when

Answer 2

They relate to
acquisition
construction or
production of a qualifying asset

Question 3

Qualifying asset

Answer 3

Any asset that takes a substantial period of time to get ready for its intended use or sale

Question 4

Capitalization of borrowing cost should commence when

Answer 4

All of the following apply

1. Expenditure for the asset is being incurred
2. Borrowing costs are being incurred
3. Activities necessary to get the asset ready for use are in progress

Question 5

Capitalization of borrowing cost ceases

Answer 5

When substantially all the activities that are necessary to get the asset ready for use are complete

Question 6

Capitalization of borrowing costs should be suspended

Answer 6

During extended periods in which active development is interrupted

Question 7

Specific borrowing

Answer 7

Where a loan is taken out specifically to finance the construction of an asset

Amount to be capitalized = interest payable on loan - income earned on temporary investment of borrowing

Question 8

General borrowing

Answer 8

If construction is financed from general borrowing

Cost capitalized = weighted avg rate to the expenditure incurred on the asset

Question 9

Disclosure

Answer 9

1. The value of borrowing costs capitalized during the period
2. The capitalization rate

Question 10

Questions

General borrowing when cost is distributed over the year

Answer 10

Weighted avg of cost * weighted avg rate