Conditions for capitalisation

Learning objectives

• Explain the conditions for capitalising borrowing costs as part of the cost of the qualifying asset: probable future economic benefits and reliable measurement.L2, L3

Normative references

• IAS 23 §9Borrowing costs directly attributable to a qualifying asset are capitalised as part of its cost when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably; in a hyperinflationary context (IAS 29), the part of borrowing costs that compensates for inflation is recognised as an expense.

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

1 question

• Which conditions must be met to include borrowing costs in the cost of a qualifying asset? Several answers are correct.L2