This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice (http://www2.deloitte.com/ca/en/legal/cookies.html) for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

IAS 23 — Borrowing Costs

Effective date:

First effective as Canadian GAAP under Part I for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  Earlier application of Part I was permitted.

Published by the IASB:

March 2007

Included in Part I of CPA Canada Handbook:

January 2010

Overview

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 included in the cost of the asset. Other borrowing costs are recognized as an expense.

Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made.

Capitalization should commence when expenditures are being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress (may include some activities prior to commencement of physical production). Capitalization should be suspended during periods in which active development is interrupted. Capitalization should cease when substantially all of the activities necessary to prepare the asset for its intended use or sale are complete. If only minor modifications are outstanding, this indicates that substantially all of the activities are complete.

History of IAS 23

The following table shows the history of this standard subsequent to the adoption of IFRS in Canada.

Date1

Development

Comments

Included in Part I of the CPA Canada Handbook2

January 2010

Part I of the CPA Canada Handbook issued

Effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier application is permitted.

January 2010

December 12, 2017

Amended by Annual Improvements to IFRSs 2015 – 2017 Cycle (clarification in respect of specific borrowing remaining outstanding after the related asset is ready for its intended use or sale)

The amendment to IAS 23 clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings.

The amendment is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted.

 

April 2018

Notes

  1. For further details of relevant developments prior to this, please refer to our Deloitte Global section.
  2. Newly issued, amended or revised IFRSs are part of Canadian GAAP only after they are approved by the Accounting Standards Board in accordance with its due process.

The above summary does not include details of consequential amendments made as the result of other projects.

Related Interpretations

  • None

Related IFRIC Agenda Rejection Notices

The rejection notices are available in our Deloitte Global section.

  • IFRS 10 & IFRS 11 — Transition provisions in respect of impairment, foreign exchange and borrowing costs (November 2013)
  • IAS 23 — Meaning of "general borrowings" (November 2009)
  • IAS 23 — Foreign exchange and capitalizable borrowing costs (January 2008)

AcSB’s IFRS Discussion Group meetings

  • June 21, 2018 - IAS 23: Capitalization of Financing Costs
  • December 3, 2015 - IAS 23: Financial Liabilities Measured at Fair Value through Profit or Loss
  • September 10, 2015 - IAS 23: Impairment
  • June 12, 2014 - IAS 23:  Financial Liabilities Measured at Fair Value through Profit or Loss and IAS 23: Impairment

Amendments under consideration

  • None

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.