AASB 123 - Borrowing Costs - July 2004
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Main Requirements
This Standard permits a choice between two treatments of borrowing costs. The treatment prescribed in AASB 1036 (capitalisation of borrowing costs related to qualifying assets) is continued in this Standard as the alternative to the benchmark treatment. The benchmark treatment is to expense all borrowing costs in the period incurred.
In this Standard, the terms “borrowing costs” and “qualifying asset” are defined in paragraph 4. The disclosures required are specified separately for each permitted treatment of borrowing costs.
For those entities that choose not to expense all borrowing costs, this Standard requires:
(a) capitalisation of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset;
(b) recognition as an expense in the period incurred of all borrowing costs not capitalised in accordance with (a); and
(c) cessation or suspension of capitalisation in specified circumstances.
Adoption of this Standard does not constitute a change in accounting policy for an entity that adopts this Standard and continues the capitalising policy it followed under AASB 1036.