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IAS 23 Borrowing Costs

IAS 23 Borrowing Costs requires borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset to form part of the cost of that asset. Other borrowing costs are recognised as an expense.

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Summary

Borrowing costs are those interest costs (including related exchange differences) that are directly attributable to the acquisition, construction or production of a qualifying asset.

  • A qualifying asset is an asset that takes a substantial period of time to get ready for its intended use.
  • Borrowing costs, in relation to qualifying assets are capitalised where they arise during the period that the asset is being prepared for use or sale.

Related IFRIC interpretations

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IFRIC 1 addresses accounting for a change in a provision that is included in the carrying amount of an item of property, plant or equipment.
IFRIC 12 Service Concession Arrangements
Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.

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Exclusive Borrowing costs
  • eBook chapter
  • 2022
  • PKF International Ltd
  • Wiley Interpretation and Application of IFRS Standards
Updated edition providing a detailed reference guide with practical examples, and IFRIC interpretations and directions. This chapter discusses IAS 23.
Exclusive Capitalisation of borrowing costs
  • eBook chapter
  • 2021
  • Ernst & Young LLP
  • International GAAP - Generally Accepted Accounting Practice under International Financial Reporting Standards
A global perspective on technical accounting issues with worked examples and illustrations from published financial reports of major listed companies from around the world. This chapter discusses IAS 23.
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