IAS 23 “Borrowing Costs” regulates the extent to which entities are allowed to capitalize borrowing costs incurred on money borrowed to finance the acquisition of certain assets. Required: State two (2) conditions to be met for: Capitalization of borrowing costs to commence. Capitalization of borrowing costs to cease.

IAS 23 “Borrowing Costs” regulates the extent to which entities are allowed to capitalize borrowing costs incurred on money borrowed to finance the acquisition of certain assets. Required: State two (2) conditions to be met for: Capitalization of borrowing costs to commence. Capitalization of borrowing costs to cease.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 14GI

See similar textbooks

Similar questions

II. When the cárrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount or net realizable period shall not exceed the amount of borrowing costs it incurred I. The amount of borrowing costs that an entity capitalizes during a Which of the following statements is correct? in that period. value, the carrying amount is written down or written off i accordance with the requirements of other Standards. a. Ionly C. Both I and II b. II only d. Neither I nor II
IAS 23 “Borrowing Costs” regulates the extent to which entities are allowed to capitalize borrowing costs incurred on money borrowed to finance the acquisition of certain assets.Required:State two (2) conditions to be met for: i) Capitalization of borrowing costs to commence. ii) Capitalization of borrowing costs to cease.
According to PAS 23, borrowing costs are capitalized when * A. They relate directly to the acquisition, construction, or production of a qualifying asset. B. The entity chooses to capitalize them C. They are material and are expected to be incurred over more than one reporting period. D. All of the options
1. PAS 23 does not require which of the following disclosures? * A. The capitalization rate used to determine the capitalizable borrowing costs. B. PAS 23 requires the disclosure of all these information. C. The amount of borrowing costs capitalized during the period. D. Separate presentation of qualifying assets from other assets either on the face of the statement of financial position or in the notes. 2. How much is the cost of the qualifying asset on initial recognition? * A. 15,045,000 B. 13,010,000 C. 14,970,900 D. 14,920,000 3. According to PAS 23, borrowing costs are capitalized when * A. They relate directly to the acquisition, construction, or production of a qualifying asset. B. The entity chooses to capitalize them C. They are material and are expected to be incurred over more than one reporting period. D. All of the options
IAS 23 Borrowing Costs 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 to be capitalised or included in the cost of the asset once they meet certain conditions. Required:Identify THREE conditions that must be met before an entity can commence to capitalise borrowing cost.
- Statement 1: An entity shall capitalize borrowing costs that are indirectly attributable to the acquisition, construction', or production of a qualifying asset as part of the cost of that asset. Statement 2: An entity shall recognize other borrowing costs as an expense in the period which it incurs them. Only the first statement is correct. a. b. Only the second statement is correct. C. Both statements are correct. d. Neither of the statements is correct.
6. Statement 1: An entity that borrows funds specifically for the purpose of obtaining a qualifying asset shall determine the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditure of that asset. Statement 2: An entity that borrows funds generally and uses them for the purpose of obtaining a qualifying asset shall determine the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. a. Only the first statement is correct. b. Only the second statement is correct. C. Both statements are correct. d. Neither of the statements is correct.
According to PAS 23, borrowing costs are capitalized when * They relate directly to the acquisition, construction, or production of a qualifying asset. The entity chooses to capitalize them They are material and are expected to be incurred over more than one reporting period. All of the options
When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the derecognition of that financial asset in accordance with PFRS 9, an entity shall I. Recalculate the gross carrying amount of the financial asset as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset's original effective interest rate. II. Recognize a modification gain or loss in profit or loss. A. I only. B. Neither I nor II. C. ll only. D. Both I and II.
Under PFRS 9, a financial asset shall be measured subsequently at amortized cost when: I. The business model of the entity is to hold the financial asset in order to collect contractual cash flows on specifies dates. II. The contractual cash flows are solely payment of principal and interest on the principal amount outstanding. O Il only Both I anf II O Either I orll O lonly Next
of being used while construction continues on other An entity shall suspend capitalization of borrowing costs during extended periods in which it suspends active development of a qualifying asset. 9. Statement 1: When an entity completes the construction of a qualifying asset in parts and each part is not capable Statement 2:. parts, the entity shall cease capitalizing borrowing costs when it completes partly the activities. a. Only the first statement is correct. b. Only the second statement is correct. C. Both statements are correct. d. Neither of the statements is correct.
19 - What is the monetary expression of the rights of third parties lending to the enterprise over the assets?A) ASSETB) SOURCEC) EXPENSED) CAPITALE) ASSET