Topic 3: Borrowing Cost

Front

What is the core principle of borrowing costs according to MFRS 123?

Back

Borrowing costs directly related to qualifying assets are capitalized

Front

What is considered a qualifying asset?

Back

An asset that takes a substantial period of time to get ready for use or sale

Front

When should an entity begin capitalizing borrowing costs?

Back

When it incurs expenditures for the asset, when construction of the asset has started, and when it incurs borrowing costs.

Front

When should an entity cease capitalizing borrowing costs?

Back

When all activities are complete

Front

What is the purpose of determining the amount of borrowing costs eligible for capitalization?

Back

To accurately reflect the cost of the asset in financial statements

Front

What is the significance of investment income in relation to borrowing costs?

Back

It reduces the amount of borrowing costs eligible for capitalization

Front

What is the capitalization rate?

Back

The weighted average of borrowing costs applicable to outstanding borrowings