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IAS Plus newsletter — Special Global Edition – Proposed Amendments to IAS 23 Borrowing Costs

Published on: 20 Jun 2006

On 25 May 2006, the International Accounting Standards Board (IASB) issued an Exposure Draft (ED) to amend IAS 23 Borrowing Costs. The proposed amendments would eliminate the option in IAS 23 of recognising all borrowing costs immediately as an expense. To the extent that borrowing costs relate to the acquisition, construction or production of a qualifying asset measured on a cost basis, the revised standard would require that they be capitalised as part of the cost of that asset. All other borrowing costs would be expensed as incurred.

The proposals are part of the IASB’s ongoing project to eliminate differences between International Financial Reporting Standards (IFRSs) and US Generally Accepted Accounting Principles (US GAAP). Although the ED addresses the main difference between US GAAP and IAS 23, some differences would remain.

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