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IAS 23 – US GAAP convergence project

Background

This short-term IASB-FASB convergence project considered whether and how to converge IAS 23 Borrowing Costs and SFAS 34 Capitalization of Interest Cost.

IAS 23 and SFAS 34, prescribe different accounting treatments for borrowing costs:

  • IAS 23 permits two possible treatments, either the capitalisation of borrowing costs, to the extent that are directly attributable to the acquisition, construction or production of a qualifying asset (as defined), or alternatively, immediately expensing the borrowing costs
  • FAS 34 requires the capitalisation of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (as defined). Immediate expensing is not an option.

Not only is the fundamental approach different between IFRS and US GAAP, how the two sets of standards define a 'qualifying asset' is quite different.

 

Current status of the project

This project has been completed. A revised IAS 23 Borrowing Costs was issued on 29 March 2007.

 

Project milestones

DateDevelopmentComments
25 May 2006 Exposure Draft Proposed Amendments to IAS 23 'Borrowing Costs' published Comment deadline 29 September 2006
29 March 2007 IAS 23 Borrowing Costs issued Effective for annual periods beginning on or after 1 January 2009

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.