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IAS 16 – Disclosure of carrying amount information for assets stated at revalued amounts

Date recorded:

The Committee received a request inquiring whether an entity is required to reflect the capitalisation of borrowing costs to meet the disclosure requirement in IAS 16 Property, Plant and Equipment paragraph 77(e) for assets stated at revalued amounts for which borrowing costs are not capitalised in accordance with IAS 23 Borrowing Costs paragraph 4(a). The submitter asserted that the capitalisation of borrowing costs for these assets to meet disclosure requirements is burdensome, and suggested that it should not be a requirement of IAS 16 to disclose these costs.

This issue was discussed by the Committee in January 2014, and it was observed that the requirements in paragraph 77(e) of IAS 16 are clear, that the amount at which qualifying assets would have been carried at under the cost model includes borrowing costs capitalised in accordance with IAS 23, and that this requirement enables users of financial statements to compare between entities that apply the cost model in IAS 16, and those that apply the revaluation model.

The purpose of this paper is to provide feedback on the comment letter received on the tentative agenda decision and ask the Committee whether it agrees with the staff recommendation that the agenda decision should be finalised.


A Committee member noted that he agreed with the proposed wording for the final agenda decision; however, he questioned whether use of the word capitalisation throughout made sense, given that in such a case the entity would not actually be capitalising borrowing costs if they were in a fair value model, and questioned whether using the word ‘calculate’ would be more appropriate. However, another Committee member pointed out that IAS 16 requires an entity to initially measure an item of property, plant and equipment at cost, and then to apply the fair value model subsequent to initial recognition, so the original wording was retained.

Another Committee member questioned the last sentence in the penultimate paragraph, noting that he thought the Committee had agreed to remove said sentence at the previous meeting.

The Committee members agreed to the proposed wording for the final agenda decision, subject to checking whether the sentence that discussed comparability should be removed.

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