Borrowing cost capitalisation

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November 22, 2016 at 11:07 am #350603
mamolokom
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Hello Chris,

with regards to capitalisation of borrowing cost, on the notes as well as my study text, it states that capitalization must stop when the asset is ready for use. what happens if the asset is being used while it is still in construction or being assembled , how do you account the borrowing cost. do I pro-rata them or capitalise in full?
November 22, 2016 at 9:19 pm #350777
P2-D2
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Hi,

We stop capitalising at the earliest opportunity, so once it is being used then the capitalisation stops.

From a real life perspective it would be very rare that an asset would be being used anyway if it was still being constructed.

Thanks
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