Scribd Logo
Upload

Welcome to Scribd!

  • 79 views

    PAS 16 Borrowing Costs

    Uploaded by

    panda 1
    Borrowing costs include interest and other costs from borrowing funds. They may be capitalized as part of the cost of a qualifying asset, which is an asset that takes substantial time to get ready for use. Qualifying assets include manufacturing plants, power facilities, and intangible assets. Borrowing costs are directly capitalized if the funds are directly attributable to a qualifying asset, and are expensed if not directly attributable. Capitalization is suspended during extended delays in asset development. Disclosures include the amount of capitalized borrowing costs and the capitalization rate used.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    PAS 16 Borrowing Costs

    Uploaded by

    panda 1
    79 views2 pages
    Borrowing costs include interest and other costs from borrowing funds. They may be capitalized as part of the cost of a qualifying asset, which is an asset that takes substantial time to get ready for use. Qualifying assets include manufacturing plants, power facilities, and intangible assets. Borrowing costs are directly capitalized if the funds are directly attributable to a qualifying asset, and are expensed if not directly attributable. Capitalization is suspended during extended delays in asset development. Disclosures include the amount of capitalized borrowing costs and the capitalization rate used.

    Original Description:

    dcfgvb

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Borrowing costs include interest and other costs from borrowing funds. They may be capitalized as part of the cost of a qualifying asset, which is an asset that takes substantial time to get ready for use. Qualifying assets include manufacturing plants, power facilities, and intangible assets. Borrowing costs are directly capitalized if the funds are directly attributable to a qualifying asset, and are expensed if not directly attributable. Capitalization is suspended during extended delays in asset development. Disclosures include the amount of capitalized borrowing costs and the capitalization rate used.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    79 views2 pages

    PAS 16 Borrowing Costs

    Uploaded by

    panda 1
    Borrowing costs include interest and other costs from borrowing funds. They may be capitalized as part of the cost of a qualifying asset, which is an asset that takes substantial time to get ready for use. Qualifying assets include manufacturing plants, power facilities, and intangible assets. Borrowing costs are directly capitalized if the funds are directly attributable to a qualifying asset, and are expensed if not directly attributable. Capitalization is suspended during extended delays in asset development. Disclosures include the amount of capitalized borrowing costs and the capitalization rate used.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PAS 16 Borrowing Costs

    Borrowing Costs are defined as interest and other costs that an entity incurs in connection with borrowing of
    funds.

    Borrowing Costs may include:


     Interest expense calculated using the effective interest method
     Finance charge with respect to a finance lease
     Exchange difference arising from foreign currency borrowing to the extent that it is regarded as an
    adjustment to interest cost

    Qualifying Asset is an asset that necessarily takes a substantial period of time to get ready for the intended use or
    sale.
     Manufacturing plant
     Power generation facility
     Intangible asset
     Investment property

    Excluded from capitalization:


    Capitalization of borrowing costs:


     Shall be suspended only during extended period of delay in which active development is delayed.
     If the borrowing is directly attributable to a qualifying asset, the borrowing costs is required to be
    capitalized as cost of the asset.
     If the borrowing is not directly attributable to a qualifying asset, the borrowing cost shall be expensed as
    incurred.

     Excluded: Financial asset and inventories that are manufactured/ produce over a short period of time and
    assets that intended use or sale

    If the qualifying asset is financed by specific borrowing, the capitalized borrowing cost is equal to actual
    borrowing cost incurred up to completion of asset minus any investment income from the temporary investment of
    the borrowing

    If the qualifying asset is financed by general borrowing, the capitalized borrowing cost is equal to average
    expenditures on the asset multiplied by a capitalization rate or actual borrowing cost incurred, whichever is lower.

    An asset is being constructed for an entity’s own use. The asset has been financed with a specific new borrowing.
    The
    cost incurred during the construction period as a result of expenditures for the asset is a part of the historical cost
    of acquiring the asset to be allocated over the estimated useful life of the asset.

    When computing the amount of interest cost to be capitalized, the concept of “avoidable interest” refers to that
    portion of total interest cost which would not have been incurred if expenditures for asset construction had not
    been made.

    Directly attributable to the construction of a qualifying asset


     Recognize as an expense in the period incurred
     Capitalize as part of the cost of the asset
    Disclosure related to borrowing costs
     The amount of borrowing costs capitalized during the period
    Disclosure related to borrowing costs
     The amount of borrowing costs capitalized during the period
     The capitalization rate used to determine the amount of borrowing costs eligible for capitalization

    You might also like