CAF-1 · Chapter 2 · Question 12 of 15
For funds borrowed generally, how is the amount of borrowing costs eligible for capitalization determined?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) By applying a capitalization rate based on the weighted average of general borrowings.
Explanation
For general borrowings, the eligible borrowing costs are calculated by multiplying expenditures by a capitalization rate, which is the weighted average of general borrowing costs.
More IAS 23 Borrowing Costs MCQs
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