IAS 23 · Workpapers (Step 4 of 5)
Workpaper assignment
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General borrowings capitalisation rate file
General borrowings: weighted expenditure, capitalisation rate and cap
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 23 workpaper
- Level
- Advanced
- Estimated time
- ≈ 60 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Logistique Pennoir SA (fictitious entity) builds in 20X5 a logistics platform, a qualifying asset, financed by the general borrowings of the entity. Three loans are outstanding: A (3,000,000 EUR at 8%), B (5,000,000 EUR at 6%) and C (2,000,000 EUR at 9%, drawn on 1 July). Year end 31 December 20X5.
Assignment
Capitalisation rate file
Purpose of the workpaper
For an asset financed by general borrowings, list the time-weighted expenditure on the asset (product expenditure × fraction of the period, supplied by the file: the engine does not compute weighted averages), the total borrowing costs and the weighted average of the borrowings, then enter the capitalisation rate (costs ÷ weighted average) and check it. Compute the eligible costs, apply the cap at the costs incurred and prepare the entries and the note.
Questions of the file covered by this workpaper
- Compute the weighted average expenditure.
- Compute the capitalisation rate.
- Compute the eligible costs.
- Apply the cap at the borrowing costs incurred.
- Record the interest expense of the year and then the inclusion.
Documents in the file
Open the documents to pick out the relevant information.