IAS 7 – Classification of interest paid that is capitalised (new)
As such, the staff proposed the following recommendations: Explicitly include interest paid that is capitalised into the cost of property, plant, and equipment in the example guidance in paragraph 16 of cash flows arising from investing activities.
Clarify paragraphs 32 and 33 to avoid contradiction with the guidance in paragraph 16, by: Amending paragraph 32 to clarify that interest paid that is capitalised in accordance with IAS 23 Borrowing Costs should be classified in accordance with paragraph 16.
Amending paragraph 33 to exclude interest paid that has been capitalised in accordance with IAS 23 and refer instead to paragraph 16.
This request has been made to include these proposed amendments in the 2010-2012 annual improvements cycle. The Committee discussed the proposed amendments and decided an additional amendment should be made to clarify that interest paid and capitalised into inventory should be classified in the operating section of the statement of cash flows.
The Committee agreed with the staff's recommendation to amend paragraphs 16, 32, and 33 of IAS 7 and to include this in the annual improvements cycle.