CERTYNEX IFRS ACADEMY

Work on a warehouse is interrupted for several months: active development stops for lack of funding of the contractor, while the entity's loan continues to run. What happens to the capitalisation of borrowing costs during this extended interruption?

It continues as normal, because the loan remains outstanding and continues to finance the asset under construction.

It continues, but only at the lowest interest rate among the entity's borrowings during the stoppage.

It is suspended during the extended interruption of active development.

It is suspended, but only if the entity has first obtained the written agreement of its lender.