IAS 23 & IAS 40 - Borrowing Costs and Investment Property

Question 1

what happens to borrowing costs that relate to a qualifying asset

Answer 1

must be capitalised

Question 2

where are borrowing costs that do not need to be capitalised represented

Answer 2

SPL

Question 3

what is a qualifying asset

Answer 3

have a period where they are getting ready for use

Question 4

when does capitalisation of a qualifying asset begin

Answer 4

when expenditure from loan is first incurred

Question 5

when does capitalisation of a qualifying asset end

Answer 5

when the asset is ready for use

Question 6

in what industries is borrowing costs being capitalised most relevant

Answer 6

building and construction

Question 7

what is investment property

Answer 7

property that is leased out or rented, not being sold/used for business

Question 8

can you have a property which is both being rented and used for business

Answer 8

no

cannot have both IAS16 and IAS40

Question 9

two models for measuring investment property

Answer 9

fair value (must revalue every year)

cost model (cost - accumulated depreciation - impairment loss)