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Dear Sir
I just noticed that when borrowing costs are capitalised only the costs incurred d since works started are accounted
However, the interests on invested surplus are deducted for all of the periodt since the money was borrowed til it’s used
Is there any reason for that?Many thanks,
StefanoI disagree with the idea of recognising / reducing borrowing costs by interest earned from the beginning of the loan. I believe that there is in fact an exam answer from the examiner that specifically points out that we can only reduce the borrowing costs by the interest earned in the period that borrowing costs are being capitalised
Just don’t ask me which exam it was whe the examiner pointed out this issue – but it was certainly since 2007 (probably!)
Thank you very much for this clarification!!
In exam I will only deduct interest relating to the period capitalisation has started.Thanks again
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