Capitalisation rate used

Learning objectives

• Prepare the disclosure of the capitalisation rate used when general borrowings are involved.L2, L3
• Justify and defend in a professional file (L4) the treatment adopted for the "Disclosure of the capitalisation rate used" concept, distinguishing the IFRS requirement, the case data, the teaching assumption and judgement.L4

Normative references

• IAS 23 §26Disclosures: the amount of borrowing costs capitalised during the period and the capitalisation rate used.

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

2 questions

• An entity that determines the costs eligible for capitalisation using a capitalisation rate does not have to disclose that rate.L2
• To prepare its notes, Rivoire has the following data on its general borrowings: borrowing costs for the year {total_costs}; weighted average amount outstanding {weighted_borrowings}. The weighted average expenditure on the qualifying asset is {weighted_expenditure} (cap not reached, case data). Calculate the capitalisation rate to disclose and the amount of borrowing costs capitalised to disclose.L3