AASB 123 - Borrowing Costs - July 2004
A.2 Funds borrowed generally — calculatiA.2 Funds borrowed generally — calculation of borrowing costs
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A.2 Funds borrowed generally – calculation of borrowing costs
To the extent that funds are borrowed generally, AASB 1036.5.2 requires the amount of borrowing costs capitalised to qualifying assets to be determined by applying a capitalisation rate to the weighted average accumulated expenditures relating to qualifying assets during the reporting period. To the extent that funds are borrowed generally, AASB 123.17 requires the amount of borrowing costs capitalised to qualifying assets to be determined by applying a capitalisation rate to the expenditures on that asset. AASB 123.21 notes that the average carrying amount of the asset during a period is normally a reasonable approximation of the accumulated expenditures to which the capitalisation rate is applied. This implies that there may be instances in which the average carrying amount of a qualifying asset during a period is not a reasonable approximation of the accumulated expenditures to which the capitalisation rate should be applied. Therefore, in these instances, the amount of borrowing costs capitalised in respect of the asset under AASB 123 will differ from the amount capitalised under AASB 1036.