CAF-1 · Chapter 2 · Question 1 of 15
Which of the following assets would typically be classified as a 'qualifying asset' under IAS 23, allowing for the capitalization of borrowing costs?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A custom-built power plant that takes two years to construct.
Explanation
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Routine inventories and assets ready for use upon purchase do not qualify.
More IAS 23 Borrowing Costs MCQs
- Q3Delta Inc. borrowed Rs. 40 million specifically to construct a qualifying asset. Before the funds were needed for construction, Delta…
- Q4Which of the following is typically excluded from being a 'qualifying asset' under IAS 23?
- Q5Which of the following costs is NOT considered a borrowing cost under IAS 23?
- Q6What is the condition for capitalizing borrowing costs regarding the probability of economic benefits?
- Q7When does the capitalization of borrowing costs commence?