The qualifying asset

Learning objectives

• Identify a qualifying asset (one that necessarily takes a substantial period of time to get ready for its intended use or sale) from the facts of the case.L1, L2, L3

Normative references

• IAS 23 §5Definitions: borrowing costs; qualifying asset = an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

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

3 questions

• Which conditions must be met to include borrowing costs in the cost of a qualifying asset? Several answers are correct.L2
• Which of these descriptions matches a qualifying asset?L1
• Aubrac is building two items: a cold-storage warehouse whose construction takes 16 months, and a standard machine assembled in 6 weeks. The accountant hesitates because the standard sets no quantified duration for a substantial period. In three to five sentences, justify your conclusion on whether each asset is qualifying.L3