When might borrowing costs not appear in a statement of profit or loss and other comprehensive income?
A) If they result from a negatively geared project.
B) If they are less than five percent of total expenses.
C) If borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset.
D) If they are not incurred in the ordinary course of business.

Question

Quizplus · Accepted Answer

Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset, as per IAS 23. In such cases, these costs are added to the cost of the asset, and are not recognized in the statement of profit or loss and other comprehensive income. Options A, B and D are not correct as they do not relate to the criteria for capitalization of borrowing costs.

When Might Borrowing Costs Not Appear in a Statement of Profit