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Hallow sir, hope u are doing good.
i would like to ask question about the IAS 23-Borrowing cost.
on the examples that u gave us, they are all one year finance cost. does the finance cost continue till the cessation or the interruption no matter the reporting period.
To illustrate suppose that we have taken 2M loan at the start of the period, and at the start of the period we have incurred 1M on constructing the asset, and interest rate is 5%. and at the end of the period we have capitalized borrowing cost 50,000. so my question is do need to continue charging this 1M we spent already in subsequent years until the cessation or interruption.
hope u get my point.
Hi,
Whilst we are constructing the asset then we capitalise the borrowing costs. It would depend on how much we incur in the next period as to how much we would capitalise. We would have to be incurring some expenditure as otherwise the asset would not be under construction, how much we incur we do not yet know, but we would still capitalise the interest incurred on the 1 M.
Thanks
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