06-28-2010, 03:57 PM
Dear Asalam o Aaikum
As per IAS 16 PPE, interest charges are not capitalised for assets. Instead they are charged to P/L under finance charges. All expenses incurred to bring the assets for its intended used are capitalised e.g transport cost, VAT (which is not transferable).
IAS 23 deals with borrowing cost for qualifying assets. Qualifying assets are assets that takes a long period for completion. Hence during these period part of the interest is allowable for capitalisation.
In your case if the asset refered is a qualifying assets then under IAS 23 you can capitalised the interest charged till completion of the assets. In the other case , same is expensed to P/L under Finance charges.
Hope this answer your question.
As per IAS 16 PPE, interest charges are not capitalised for assets. Instead they are charged to P/L under finance charges. All expenses incurred to bring the assets for its intended used are capitalised e.g transport cost, VAT (which is not transferable).
IAS 23 deals with borrowing cost for qualifying assets. Qualifying assets are assets that takes a long period for completion. Hence during these period part of the interest is allowable for capitalisation.
In your case if the asset refered is a qualifying assets then under IAS 23 you can capitalised the interest charged till completion of the assets. In the other case , same is expensed to P/L under Finance charges.
Hope this answer your question.
