The Board is considering whether to eliminate the choice in IAS 23 to either capitalise borrowing costs that meet certain conditions or to report all borrowing costs as an expense in the period in which they were incurred. In addition to these two alternatives, the Board is considering a possible third approach, namely to capitalise an asset-specific cost of capital (including both a cost of borrowing and a cost of equity capital).

Board members indicated that they did not consider this to be a major issue and whichever way the Board concludes, they felt there will be mixed feedback. The Board tentatively agreed that all borrowing costs should be reported as an expense. The Board recognises that this will not lead to convergence, as most countries currently either require capitalisation or allow a choice. Therefore, before the Board makes a final decision the issue will be put on the agenda of the next National Standard Setters meeting.

If capitalisation were to be allowed, then the Board believes that detailed guidance is needed. The third approach was seen as being too subjective and dismissed.