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