CAF-1 · Chapter 2 · Question 7 of 15
When does the capitalization of borrowing costs commence?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) When expenditures and borrowing costs are incurred, and activities to prepare the asset have begun.
Explanation
Capitalization commences when expenditures and borrowing costs are incurred, and activities to prepare the asset for its intended use or sale are underway.
More IAS 23 Borrowing Costs MCQs
- Q9If a temporary delay is a necessary part of getting an asset ready (e.g., waiting for high water levels to recede during bridge…
- Q10When are borrowing costs generally considered to cease being capitalized?
- Q11Omega Corp invests unused specific borrowed funds and earns Rs. 2 million in interest. How is this income treated under IAS 23?
- Q12For funds borrowed generally, how is the amount of borrowing costs eligible for capitalization determined?
- Q13An entity completes a business park in stages, where each building can be used independently. What is the rule for ceasing capitalization?