General Studies · IAS 23 Borrowing Costs
Genius Builders Ltd. is constructing a new residential complex. The construction began on 1 January, funded by a general pool of borrowings. Which of the following scenarios, occurring during the construction period, would lead to the cessation of capitalization of borrowing costs related to the residential complex, in accordance with IAS 23 'Borrowing Costs'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The entity deciding to re-design parts of the complex's interior layout, resulting in a three-month deferral of completion while new architectural plans are drawn up.
- 2A dispute with a major subcontractor leading to an unforeseen suspension of construction for three months while legal action is pursued.
- 3The residential complex achieving substantial completion on 30 September, although marketing and sales activities for the units only begin on 1 November.✓
- 4A temporary delay of two weeks in construction due to unusually heavy rainfall, which is a normal part of the local climate during that season.
Correct answer
The residential complex achieving substantial completion on 30 September, although marketing and sales activities for the units only begin on 1 November.
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