Exchange differences regarded as interest

Learning objectives

• Assess, using professional judgement, the portion of exchange differences on foreign currency borrowings that is regarded as an adjustment to interest costs.L3
• Justify and defend in a professional file (L4) the treatment adopted for the "Exchange differences treated as interest adjustment" concept, distinguishing the IFRS requirement, the case data, the teaching assumption and judgement.L4

Normative references

• IAS 23 §6Borrowing costs: interest expense calculated using the effective interest method (IFRS 9), interest on lease liabilities (IFRS 16), and exchange differences to the extent that they are regarded as an adjustment to interest costs.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• Nérée borrowed in a foreign currency to finance a qualifying asset. Which statement is consistent with the standard's list of borrowing costs?L3