Borrowing Costs

Question 1

Qualifying asset

Answer 1

A qualifying asset is an asset that necessary takes a substantial period of time to get ready for its intended use or sale

Question 2

Borrowing cost

Answer 2

Borrowing cost are interest and other costs that an entity occurs in connection with the borrowing of funds 

Question 3

Criteria for borrowing cost to be capitalised

Answer 3

• they must be a qualifying asset
• Expenditures are being incurred on the qualifying asset
• Borrowing cost are being incurred
• Activities to prepare for assets have begun