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IAS 23 BORROWING COSTS

IAS 23 BORROWING COSTS. CA. NIRMAL GHORAWAT B. COM(HONS), ACA. OBJECTIVE. Prescribe the Accounting Treatment for Borrowing Costs. KEY TERMS. BORROWING COSTS (BC) QUALIFYING ASSETS (QA). INTEREST + OTHER COSTS incurred by an entity in connection with the borrowing of funds.

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IAS 23 BORROWING COSTS

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  1. IAS 23 BORROWING COSTS CA. NIRMAL GHORAWAT B. COM(HONS), ACA

  2. OBJECTIVE Prescribe the Accounting Treatment for Borrowing Costs.

  3. KEY TERMS BORROWING COSTS (BC) QUALIFYING ASSETS (QA) INTEREST + OTHER COSTS incurred by an entity in connection with the borrowing of funds. is an asset that NECESSARILY takes a SUBSTANTIAL period of time to get ready for intended use or sale.

  4. BENCHMARK TREATMENT RECOGNITION • BC shall be recognised as an Expense in the period in which they are incurred. ~ regardless of how they are incurred. DISCLOSURE • Accounting Policy adopted for Borrowing Costs.

  5. ALLOWED ALTERNATIVE TREATMENT RECOGNITION • BC shall be recognised as an Expense in the period in which they are incurred. EXCEPT to the extent they are CAPITALISED. DISCLOSURE The FS shall disclose: • the Accounting Policy for BC; • the amount of Borrowing Costs capitalised during the period; • Capitalisation Rate.

  6. CAPITALISATION OF BC BC DIRECTLY attributable to the Acquisition, Construction or Production of QA shall be CAPITALISED as part of the cost of the asset.

  7. COMMENCEMENT, SUSPENSION AND CESSATION OF CAPITALISATION

  8. IMPAIRMENT If the Carrying Amount or Expected ultimate cost of QA EXCEEDS its Recoverable Amount of Net Realisable Value (NRV) – THEN Carrying Amount is WRITTEN DOWN- as per IAS on Impairment of Assets.

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