Borrowing costs
In this lesson, you'll learn how to identify and capitalise borrowing costs under IAS 23, a critical skill for Financial Reporting and Strategic Business Reporting papers.
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In this lesson
- 0:01 Borrowing costs and asset capitalisation
- 0:53 Qualifying assets and eligibility criteria
- 1:41 Specific versus general borrowing costs
- 2:08 When capitalisation starts and stops
- 3:11 Calculating net borrowing costs worked example
About this lesson
Borrowing costs directly attributable to acquiring or constructing non-current assets must be capitalised as part of the asset's cost, not expensed immediately. You'll discover the distinction between specific borrowing (where costs are directly traceable) and general borrowing (where you calculate a weighted average rate), and understand when capitalisation begins at the start of construction and ends when the asset is ready for use. Through a worked example, you'll see how to calculate net borrowing costs by offsetting investment income earned on temporarily unused funds, ensuring you capture the true economic cost of the asset on your balance sheet.
Duration: 6m
Transcript
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