Chapter 13 - Borrowing costs: IAS 23. The main contents of the chapter consist of mains parts: Related standards, IAS 23, current GAAP comparisons, IFRS financial statement examples, looking ahead, end-of-chapter practice. | Lecture IFRS primer international GAAP basics Chapter 13 - Wiecek Young Borrowing Costs IAS 23 Wiecek and Young IFRS Primer Chapter 13 Borrowing Costs Related standards IAS 23 Current GAAP comparisons IFRS financial statement disclosures Looking ahead End-of-chapter practice 2 Related Standards FAS 34 Capitalization of interest cost 3 Related Standards IAS 2 Inventories IAS 16 Property plant and equipment IAS 38 Intangible assets IAS 40 Investment property 4 IAS 23 - Overview Objective and scope Recognition Disclosure 5 IAS 23 Objective and Scope Principle The cost of an asset should include all costs incurred that are necessary to get it ready for its intended use. IAS 23 sets out requirements for capitalizing financing costs related to the acquisition construction or production of a qualifying asset. 6 IAS 23 Objective and Scope Borrowing costs interest and other costs that an entity incurs in connection with the borrowing of funds . interest expense that results from use of the effective interest method set out in IAS 39 Financial Instruments-Recognition and Measurement 7 IAS 23 Objective and Scope Qualifying assets those that require substantial time to get ready for their intended use or sale . inventory PP amp E intangible assets investment property qualifying assets measured at FV and inventories produced in large quantities on a repetitive basis may but are not required to apply IAS 23 8 IAS 23 - Recognition Recognize borrowing costs during construction or production on qualifying assets as part of the cost of those assets as long as 1. they will result in future benefits 2. they can be measured reliably 9 IAS 23 - Recognition Borrowing costs to capitalize the avoidable costs . those that would not have been incurred if expenditures for the qualifying asset had not been made less any investment income earned on the temporary investment of such funds. If borrowing is specific to a qualifying asset avoidable costs are easy to calculate 10 IAS 23 -
