Workpapers
Workpaper template
General borrowings capitalisation rate file
- Prepared by
- AI-assisted draft
- Reviewed by
- Not reviewed — human review required
- Status
- Published
Objective of the workpaper
For an asset financed by general borrowings, list the time-weighted expenditure on the asset (product expenditure × fraction of the period, supplied by the file: the engine does not compute weighted averages), the total borrowing costs and the weighted average of the borrowings, then enter the capitalisation rate (costs ÷ weighted average) and check it. Compute the eligible costs, apply the cap at the costs incurred and prepare the entries and the note.
10 sections · 24 blocks · 4 calculations · 2 entries
- IAS 23 §14
- IAS 23 §15
- IAS 23 §26
Work this workpaper as a mission
Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.
2 instances from the cases: the calculations and entries below are run by the calculation engine.
- File and entity
- General borrowings: weighted expenditure, capitalisation rate and cap
- Case tasks documented here
- Compute the weighted average expenditure.
- Compute the capitalisation rate.
- Compute the eligible costs.
- Apply the cap at the borrowing costs incurred.
- Record the interest expense of the year and then the inclusion.
Inputs
InputsAsset and general borrowings: project, borrowings outstanding, scope
Text
PLATEFORME_LOGISTIQUE_FINANCEE_PAR_EMPRUNTS_GENERAUX
Expenditure 1 × fraction of period elapsed (product supplied)
Number
1,200,000
Expenditure 2 × fraction of period elapsed (product supplied)
Number
675,000
Expenditure 3 × fraction of period elapsed (product supplied)
Number
150,000
Expenditure 4 × fraction of period elapsed (product supplied)
Number
Borrowing costs of the period on the general borrowings
Number
630,000
Weighted average of the general borrowings outstanding (supplied)
Number
9,000,000
Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Number
7 %
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Analysis
AnalysisIAS 23 §14IAS 23 §15IAS 23 §26
Points reviewed: general borrowings, rate, scope, cap
ChecklistRequired
- General borrowings identified (excluding specific borrowings)
- Time-weighted averages checked
- Scope of the computation (entity or group) decided
- Cap at the costs incurred applied
Calculations
CalculationsIAS 23 §14IAS 23 §15IAS 23 §26
Weighted average expenditure = sum of the products expenditure × fraction
Calculation
2,025,000
Expenditure 1 × fraction of period elapsed (product supplied) ; Expenditure 2 × fraction of period elapsed (product supplied) ; Expenditure 3 × fraction of period elapsed (product supplied) ; Expenditure 4 × fraction of period elapsed (product supplied)
Rate check: costs recomputed by applying the rate to the weighted average of the borrowings
Calculation
630,000
Weighted average of the general borrowings outstanding (supplied) ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Eligible costs = weighted average expenditure × capitalisation rate
Calculation
141,750
Weighted average expenditure = sum of the products expenditure × fraction ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Amount included = lower of (computed costs; borrowing costs incurred)
Calculation
141,750
Eligible costs = weighted average expenditure × capitalisation rate ; Borrowing costs of the period on the general borrowings
Journal entries
EntriesInterest of the period recognised as an expense (original entry)
Entry
Account Debit Credit Interest expense 630,000 Interest payable 630,000 General borrowing costs included in the qualifying asset (reclassification of the expense)
Entry
Account Debit Credit Asset under construction 141,750 Interest expense 141,750
Judgements
JudgmentIAS 23 §14IAS 23 §15IAS 23 §26
Specific or general borrowings
JudgmentRequired
General borrowings
General borrowings / Specific borrowing
Rule and cross-reference: for general borrowings, the capitalisation rate is the weighted average of the borrowing costs of the period, applied to the expenditure on the asset (IAS 23, para. 14).
Rationale: use of the funds, link with the asset
TextRequired
Scope of the borrowings used in the average
JudgmentRequired
Borrowings of the entity alone
Borrowings of the entity alone / Group borrowings
Rule and cross-reference: a group may compute the weighted average over the borrowings of the parent and its subsidiaries; the scope is justified by the facts (IAS 23, para. 15).
Rationale: scope adopted and reason
TextRequired
Conclusion
ConclusionRate, capped amount included and note submitted to the reviewer
ConclusionRequired
Effect on the financial statements
FS impactEffect of the entries, line by line (derived from the entries)
Table
Disclosures
DisclosureIAS 23 §26
Disclosures: amount included and rate
ChecklistRequired
- Amount of borrowing costs included stated
- Capitalisation rate used stated
Normative references
ReferencesParagraphs cited in this workpaper and their verification status
References
Checks and financial statement impact
- Nature of the borrowings documentedPass
- Capitalisation rate checkedPass
- Inclusion entry balancedPass
- Assets
- 141,750
- Liabilities
- 630,000
- Profit or loss
- -488,250
- OCI
- 0
- Equity
- -488,250
- File and entity
- File of a capitalised project: capitalisation of borrowing costs, suspension, placing in service and interaction with an asset grant
- Case tasks documented here
- Compute the weighted average expenditure on the warehouse.
- Compute the capitalisation rate of the general borrowings.
- Compute the eligible costs of the warehouse.
- Apply the cap at the borrowing costs incurred.
- What information is missing to adopt the weighted average of the general borrowings?
- Record the borrowing costs, the grant, the transfer, the depreciation and the release.
Inputs
InputsAsset and general borrowings: project, borrowings outstanding, scope
Text
ENTREPOT_FINANCE_PAR_LES_EMPRUNTS_GENERAUX
Expenditure 1 × fraction of period elapsed (product supplied)
Number
700,000
Expenditure 2 × fraction of period elapsed (product supplied)
Number
300,000
Expenditure 3 × fraction of period elapsed (product supplied)
Number
Expenditure 4 × fraction of period elapsed (product supplied)
Number
Borrowing costs of the period on the general borrowings
Number
400,000
Weighted average of the general borrowings outstanding (supplied)
Number
5,000,000
Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Number
8 %
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Analysis
AnalysisIAS 23 §14IAS 23 §15IAS 23 §26
Points reviewed: general borrowings, rate, scope, cap
ChecklistRequired
- General borrowings identified (excluding specific borrowings)
- Time-weighted averages checked
- Scope of the computation (entity or group) decided
- Cap at the costs incurred applied
Calculations
CalculationsIAS 23 §14IAS 23 §15IAS 23 §26
Weighted average expenditure = sum of the products expenditure × fraction
Calculation
1,000,000
Expenditure 1 × fraction of period elapsed (product supplied) ; Expenditure 2 × fraction of period elapsed (product supplied) ; Expenditure 3 × fraction of period elapsed (product supplied) ; Expenditure 4 × fraction of period elapsed (product supplied)
Rate check: costs recomputed by applying the rate to the weighted average of the borrowings
Calculation
400,000
Weighted average of the general borrowings outstanding (supplied) ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Eligible costs = weighted average expenditure × capitalisation rate
Calculation
80,000
Weighted average expenditure = sum of the products expenditure × fraction ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Amount included = lower of (computed costs; borrowing costs incurred)
Calculation
80,000
Eligible costs = weighted average expenditure × capitalisation rate ; Borrowing costs of the period on the general borrowings
Journal entries
EntriesInterest of the period recognised as an expense (original entry)
Entry
Account Debit Credit Interest expense 400,000 Interest payable 400,000 General borrowing costs included in the qualifying asset (reclassification of the expense)
Entry
Account Debit Credit Asset under construction 80,000 Interest expense 80,000
Judgements
JudgmentIAS 23 §14IAS 23 §15IAS 23 §26
Specific or general borrowings
JudgmentRequired
General borrowings
General borrowings / Specific borrowing
Rule and cross-reference: for general borrowings, the capitalisation rate is the weighted average of the borrowing costs of the period, applied to the expenditure on the asset (IAS 23, para. 14).
Rationale: use of the funds, link with the asset
TextRequired
Scope of the borrowings used in the average
JudgmentRequired
Borrowings of the entity alone
Borrowings of the entity alone / Group borrowings
Rule and cross-reference: a group may compute the weighted average over the borrowings of the parent and its subsidiaries; the scope is justified by the facts (IAS 23, para. 15).
Rationale: scope adopted and reason
TextRequired
Conclusion
ConclusionRate, capped amount included and note submitted to the reviewer
ConclusionRequired
Effect on the financial statements
FS impactEffect of the entries, line by line (derived from the entries)
Table
Disclosures
DisclosureIAS 23 §26
Disclosures: amount included and rate
ChecklistRequired
- Amount of borrowing costs included stated
- Capitalisation rate used stated
Normative references
ReferencesParagraphs cited in this workpaper and their verification status
References
Checks and financial statement impact
- Nature of the borrowings documentedPass
- Capitalisation rate checkedPass
- Inclusion entry balancedPass
- Assets
- 80,000
- Liabilities
- 400,000
- Profit or loss
- -320,000
- OCI
- 0
- Equity
- -320,000
Inputs
InputsAsset and general borrowings: project, borrowings outstanding, scope
Text
Expenditure 1 × fraction of period elapsed (product supplied)
Number
Expenditure 2 × fraction of period elapsed (product supplied)
Number
Expenditure 3 × fraction of period elapsed (product supplied)
Number
Expenditure 4 × fraction of period elapsed (product supplied)
Number
Borrowing costs of the period on the general borrowings
Number
Weighted average of the general borrowings outstanding (supplied)
Number
Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Number
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Analysis
AnalysisIAS 23 §14IAS 23 §15IAS 23 §26
Points reviewed: general borrowings, rate, scope, cap
ChecklistRequired
- General borrowings identified (excluding specific borrowings)
- Time-weighted averages checked
- Scope of the computation (entity or group) decided
- Cap at the costs incurred applied
Calculations
CalculationsIAS 23 §14IAS 23 §15IAS 23 §26
Weighted average expenditure = sum of the products expenditure × fraction
Calculation
Expenditure 1 × fraction of period elapsed (product supplied) ; Expenditure 2 × fraction of period elapsed (product supplied) ; Expenditure 3 × fraction of period elapsed (product supplied) ; Expenditure 4 × fraction of period elapsed (product supplied)
Rate check: costs recomputed by applying the rate to the weighted average of the borrowings
Calculation
Weighted average of the general borrowings outstanding (supplied) ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Eligible costs = weighted average expenditure × capitalisation rate
Calculation
Weighted average expenditure = sum of the products expenditure × fraction ; Capitalisation rate = costs ÷ weighted average (ratio computed outside the engine)
Amount included = lower of (computed costs; borrowing costs incurred)
Calculation
Eligible costs = weighted average expenditure × capitalisation rate ; Borrowing costs of the period on the general borrowings
Journal entries
EntriesInterest of the period recognised as an expense (original entry)
Entry
Debit Interest expense ← Borrowing costs of the period on the general borrowings ; Credit Interest payable ← Borrowing costs of the period on the general borrowings
General borrowing costs included in the qualifying asset (reclassification of the expense)
Entry
Debit Asset under construction ← Amount included = lower of (computed costs; borrowing costs incurred) ; Credit Interest expense ← Amount included = lower of (computed costs; borrowing costs incurred)
Judgements
JudgmentIAS 23 §14IAS 23 §15IAS 23 §26
Specific or general borrowings
JudgmentRequired
General borrowings / Specific borrowing
Rule and cross-reference: for general borrowings, the capitalisation rate is the weighted average of the borrowing costs of the period, applied to the expenditure on the asset (IAS 23, para. 14).
Rationale: use of the funds, link with the asset
TextRequired
Scope of the borrowings used in the average
JudgmentRequired
Borrowings of the entity alone / Group borrowings
Rule and cross-reference: a group may compute the weighted average over the borrowings of the parent and its subsidiaries; the scope is justified by the facts (IAS 23, para. 15).
Rationale: scope adopted and reason
TextRequired
Conclusion
ConclusionRate, capped amount included and note submitted to the reviewer
ConclusionRequired
Effect on the financial statements
FS impactEffect of the entries, line by line (derived from the entries)
Table
Disclosures
DisclosureIAS 23 §26
Disclosures: amount included and rate
ChecklistRequired
- Amount of borrowing costs included stated
- Capitalisation rate used stated
Normative references
ReferencesParagraphs cited in this workpaper and their verification status
References