Land awaiting with no activity

Learning objectives

• Explain why land held without any associated development activity does not give rise to capitalisation.L2, L3

Normative references

• IAS 23 §19The activities necessary to prepare the asset go beyond physical construction (technical and administrative work before construction, such as obtaining permits) but exclude merely holding an asset when no production or development that changes the asset's condition is taking place: land under development opens capitalisation during the development, whereas land held without any associated development activity does not.

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

1 question

• Land bought and left as it is, with no development activity under way, does not open the capitalisation of the interest on the loan that financed it.L2