Examples of qualifying assets

Learning objectives

• Distinguish examples of qualifying assets (manufacturing plant, power generation facility, inventories that take a long time to produce) from non-qualifying examples (financial assets, inventories produced over a short period).L1, L2

Normative references

• IAS 23 §7Depending on the circumstances, the following may be qualifying assets: inventories, manufacturing plants, power generation facilities, intangible assets, investment properties, bearer plants; financial assets, inventories produced over a short period of time, and assets that are ready for their intended use or sale when acquired are not qualifying assets.

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

2 questions

• Among these assets, which is typically a qualifying asset?L1
• Sorbier borrowed to finance five assets: (a) a pharmaceutical plant whose construction takes 20 months; (b) a batch of investment securities; (c) packaging inventories manufactured in 2 days; (d) a ship under construction for 30 months; (e) software developed in-house over 24 months. Based on the standard's examples, how many of these assets can be qualifying assets?L2