Borrowing Costs Quiz
3 multiple-choice questions with answers and explanations · 1 easy, 2 hard
Capitalising borrowing costs on qualifying assets: when capitalisation starts, is suspended and stops.
- 1The General Rule for Capitalizing Borrowing CostsUnder IAS 23, borrowing costs directly attributable to the acquisition or construction of a qualifying asset are:easy
- 2IAS 23 — Borrowing Costs Eligible for CapitalizationA company borrows $500,000 at 8% specifically to construct a qualifying asset; the loan is outstanding all year. Surplus funds earned $6,000 of temporary investment income during construction. The borrowing costs capitalized for the year are:hard
- 3Suspending Capitalization of Borrowing CostsUnder IAS 23, if construction of a qualifying asset is suspended for an extended period for reasons other than necessary technical or administrative work, capitalization of borrowing costs during the suspension is:hard