PAS 23 BORROWING COSTSLearning Competencies••State the core principle under PAS 23.Compute for borrowing costs that are eligible forcapitalization.Conceptual Framework & Acctg.Standards (by: Zeus Vernon B. Millan)2Core principle•“Borrowing costs that are directly attributable to theacquisition, construction or production of a qualifyingasset form part of the cost of that asset. Otherborrowing costs are recognized as an expense.” (PAS 23.1)Conceptual Framework & Acctg.Standards (by: Zeus Vernon B. Millan)3Borrowing costsBorrowing costs are interest and other costs incurred by anentity in connection with the borrowing of funds.Borrowing costs may include:1.interest expense on financial liabilities or lease liabilitiescomputed using the effective interest method2.Exchange differences arising from foreign currencyborrowings to the extent that they are regarded as anadjustment to interest costs.Conceptual Framework & Acctg.Standards (by: Zeus Vernon B. Millan)4Qualifying asset•Qualifying asset is an asset that necessarily takes asubstantial period of time to get ready for its intendeduse or sale. Depending on the circumstances, any of thefollowing may be qualifying assets:a. Inventoriesb. Manufacturing plantsc. Power generation facilitiesd. Intangible assetse. Investment properties measured under cost modelConceptual Framework & Acctg.Standards (by: Zeus Vernon B. Millan)5Qualifying asset – cont … Purchase document to see full attachment
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