Capitalisation of borrowing costs - from theory to practice

The International Accounting Standards Board (IASB) issued a revised version of IAS 23 Borrowing Costs in March 2007. The new standard will result in a change in accounting policy for entities that applied the benchmark treatment of expensing borrowing costs under the previous standard. These entities will now need to develop procedures to calculate the amount of borrowing costs to be capitalised.

Although the concept of capitalising borrowing costs is simple and familiar to many, putting that concept into practice frequently leads to questions. Many of these questions are considered in this guide.  We have not attempted to cover every aspect of IAS 23, however, we believe this guide will help in addressing the problems most often encountered in practice.

Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants has converged with IFRS since 2005.  Issues addressed in this guide are also relevant to HKFRS financial statements preparers.

For further information on the guide or the issues raised in it, please contact us via info@gthk.com.hk 

Capitalisation of borrowing costs - from theory to practice April 2009 (PDF - 373kb)