Register now or log in to join your professional community.
The interest on loan related to the internal fixed asset production needs to the capitalised as pert of the cost of the asset. According to IAS23 Borrowing cost requires that borrowing costs directly attributable to the acquisition, construction or production of a 'qualifying asset' (one that necessarily takes a substantial period of time to get ready for its intended use or sale) are included in the cost of the asset. Other borrowing costs are recognized as an expense.
As per IAS23 " borrowing cost" , interest cost can be capitalized but only on qualifying assets, (that takes substantial period of time to get ready for its intended use or sales).
Agree with Richard Appiah
Non-current tangible assets such as property, plant and equipment owned by an enterprise are commonly referred to as fixed assets. Every business entity purchases some equipment or plants in order to run the business operations that result in revenue generation. The items thus purchased are generally used in the business operations for longer period, that is, at least more than a year.
The following article is an overview of the standards governing the recognition of the assets, determination of their carrying amounts and the depreciation charges and impairment losses to be recognized in relation to the fixed assets
