Good Afternoon,
I am just going through a question in the BPP revision book where it states that a loan for $20 million taken out for a qualifying asset is fully capitalised in the SOFP. Shouldn't it just be the interest element that should be capitalised?
Thank you.
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Borrowing costs Capitalisation
5y ago#1I guess so but I don't have BPP revision to see if you have misinterpreted or misquoted.
Sorry, its Laurel Group, an amended question from P7 ( Mar/Jun17), where the group took out a 20$ million loan for new project development.
5y ago#3In the original version of Q & A that I have access to the answer is questioning why if loan was $20m have development costs increased by only $15m. It anticipates that if $20m was taken out to finance the development that development costs would be expected to increase by $20m - and hence there appears to be potential risk of misstatement ($5m). (So nothing to do with the interest.)
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