CERTYNEX IFRS ACADEMY

An entity has capitalised borrowing costs in the cost of a qualifying asset. What must it check before keeping the carrying amount so obtained?

That the carrying amount does not exceed the recoverable amount or, for inventory, the net realisable value.

Nothing more: capitalising the borrowing costs validates the carrying amount of the asset.

That the borrowing costs capitalised are below 10% of the total cost of the asset.

That the carrying amount equals the fair value of the asset at the reporting date.