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Where have you read the expression? If it’s what I think you mean, it’s the amount ( rather than a rate ) which has been capitalised in the year – for disclosure purposes
capitalisation rate! In IAS 23, Borrowing costs. Were u have to use weighted average to calculate the rate.
Hi Naomi,
If you have studied F9 or P4 the formula you are talking about is the formula of WACC (Weighted average cost of capital put in the values and you will get the answer.
Mike Sir,
If i am wrong please correct me
I believe that salu is correct. There was a borrowing cost question asked within the last 12 months – can’t remember if it was F7 or P2. Why not check that out and see what the financial reporting examiners ask in a “normal” borrowing cost question?
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Hi
I would like to know if borrowing cost MUST be capitalised, or its up to the company to decide whether to expense or capitalise
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