Interaction with IAS 2

Learning objectives

• Identify the qualifying inventories for which borrowing costs may be included in cost (IAS 2, para. 17).L2, L3

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.

1 question

• Dormoy ages spirits in casks for 36 months before sale (inventory that requires a substantial preparation period, case data). The interest of the year, directly attributable to this inventory, is {attributable_interest}, payable at the end of the year. Record the entry capitalising this interest in the cost of the inventory.L3