CAF-1 · Chapter 2 · Question 8 of 15
During a major construction project, work is suspended for four months due to a prolonged labor strike. What should happen to the borrowing costs during this period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Capitalization should be suspended, and the costs expensed.
Explanation
An entity shall suspend capitalization of borrowing costs during extended periods in which it suspends active development of a qualifying asset.
More IAS 23 Borrowing Costs MCQs
- 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?
- Q14Which of the following must an entity disclose in its financial statements regarding borrowing costs?