What are the requirements of IAS-23 about capitalization of borrowing costs? Explain circumstances when capitalization can be
Question:
What are the requirements of IAS-23 about capitalization of borrowing costs? Explain circumstances when capitalization can be suspended and account for the borrowing costs to be capitalized in the following situation. On 1 October 20X1, Bash Co borrowed $6m for a term of one year, exclusively to finance the construction of a new piece of production equipment. The interest rate on the loan is 6% and is payable on maturity of the loan. The construction commenced on 1 November 20X1, but no construction took place between 1 December 20X1 to 31 January 20X2 due to employees taking industrial action. The asset was available for use on 30 September 20X2 having a construction cost of $6m.
Advertising & IMC Principles & Practice
ISBN: 978-0132163644
9th Edition
Authors: Sandra Moriarty, Nancy Mitchell, William Wells