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IAS 23 Amendments - Borrowing Costs


IAS 23 provides guidance on the accounting treatment for borrowing costs. Borrowing costs are interest and other costs incurred by an entity in connection with the borrowing of funds.  

The project was part of the Short-term Convergence project with the US Financial Accounting Standards Board (FASB). The purpose was to reduce differences between IFRSs and US generally accepted accounting principles (US GAAP) that could be resolved in a relatively short time and could be addressed outside major projects.   

The objective of this short-term convergence project was to amend IAS 23 Borrowing Costs, by removing the main difference between US GAAP and IAS 23. This was be done by requiring the capitalisation of borrowing costs, to the extent they are directly attributable to the acquisition, production or construction of a qualifying asset. The existing option of immediate recognition of those borrowing costs as an expense was removed.

In November 2006 EFRAG submitted its comment letter in response to the Exposure Draft.  

In June 2007 EFRAG submitted its endorsement advice on the amendment to the European Commission. 

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