Accounting · International Accounting Standards
According to IAS 23 'Borrowing Costs', which of the following statements regarding the capitalization of borrowing costs is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Investment income earned on the temporary investment of general borrowings must be deducted from the borrowing costs eligible for capitalization.
- 2A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.✓
- 3Capitalization of borrowing costs should continue during extended periods in which active development of a qualifying asset is interrupted.
- 4Borrowing costs incurred on general borrowings used to purchase a completed investment property must be capitalized.
Correct answer
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
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