IAS 23 Borrowing costs

I think that the period concerned need not necessarily but often would straddle an accounting period and either way would at least need to run into a period of months although I have no concrete evidence for having this opinion. The fact that all accounting standards do not concern themselves with immaterial amounts should also be taken into consideration what constitutes a substantial period of time.I think in examination terms whether borrowing costs have to be capitalised would have to either be explicitly stated or strongly implied by the nature of the question.I tend to think this is another example of an area in which an accounting standard seems to allow a fair amount of judgement to be exercised by those preparing accounts.I ,like werty, would be happy to hear from anybody who has more information or an alternative or more refined opinion about this topic.

I am going to try to illustrate with a somewhat contrived but I think pertinent example of why I think borrowing costs can be capitalised over one accounting period.Let’s say a football club start building a stadium on first day of accounting period and it is judged to be ready for use on the last day of the accounting period (I admit a highly contrived situation).Borrowing costs associated directly with the stadium build are 10 million.My belief is that a major part of the reason why IAS 23 requires capitalisation of these costs is so they can be recognised over the remaining life of the asset in keeping with the matching principle.If they were instead immediately written off instead of recognised over say a 50 year remaining life of the stadium the income statement would take a massive hit of 10 million in first year instead of additional two hundred thousand over the remaining 50 year life of stadium if straight line depreciation is used.