IAS 23 requires the capitalization of borrowing costs directly attributable to the acquisition, construction, or production...

IAS 23 requires the capitalization of borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset. Previously, IAS 23 allowed companies to expense or capitalize borrowing costs.

Required:

Justify whether there is a change in accounting policy.

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Expert Solution

According or my point of view there is no need to change in IAS 23, because borrowing directly attributed to only Qualifying assets are capitalized as per this standard. Others borrowing cost are recognised as expenses.

A qualifying asset that takes a long period of time to get ready for its intended use . That may be property, plant, and equipment and investment property. So borrowing cost related to these assets should be cost of assets and we cant considered it as a expenses.

jeff jeffy answered 2 years ago

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