CAF-1 · Chapter 2 · Question 9 of 15
If a temporary delay is a necessary part of getting an asset ready (e.g., waiting for high water levels to recede during bridge construction), how are borrowing costs treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Capitalization continues during this necessary delay.
Explanation
Capitalization is not suspended when a temporary delay is a necessary part of the process of getting an asset ready for its intended use or sale.
More IAS 23 Borrowing Costs MCQs
- 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?
- Q15If an entity incurs minor modifications, such as decorating a property to a user's specification, does capitalization of borrowing costs…