An entity purchased new machinery from a supplier before the entity’s year end. The entity paid freight charges for the purchased machinery.

The entity took out

a loan from a bank to finance the purchase. Under IFRS,

what is the proper accounting treatment for the freight and

interest costs related to the machinery purchase?

a. The freight and interest costs should be

immediately expensed.

b. The freight and interest costs should be

capitalized as part of property, plant and

equipment.

c. The interest cost should be capitalized as part of

property, plant and equipment, and the freight

cost should be immediately expensed.

d. The freight cost should be capitalized as part of

property, plant and equipment, and the interest

cost should be immediately expensed.