Scope
An entity shall apply this Standard in accounting for borrowing costs.
Definitions
Borrowing costs are interest and other costs that an entity incurs 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.
Borrowing costs may include:
- interest expense calculated using the effective interest method as described in IFRS 9;
- [deleted]
- [deleted]
- interest in respect of lease liabilities recognised in accordance with IFRS 16 Leases; and
- exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
Depending on the circumstances, any of the following may be qualifying assets:
- inventories
- manufacturing plants
- power generation facilities
- intangible assets
- investment properties
- bearer plants.
Financial assets, and inventories that are manufactured, or otherwise produced, over a short period of time, are not qualifying assets. Assets that are ready for their intended use or sale when acquired are not qualifying assets.
Recognition
An entity shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. An entity shall recognise other borrowing costs as an expense in the period in which it incurs them.
Disclosure
An entity shall disclose:
- the amount of borrowing costs capitalised during the period; and
- the capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation.