The IASB issued a revised IAS 23 Borrowing Costs. The main change from the previous version is the removal of the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale.
The revised Standard continues the IASB’s work in its Short-term Convergence project with the US FASB to reduce differences between IFRSs and US GAAP. The IASB believes that application of the revised Standard will improve financial reporting in three ways. First, the cost of an asset will in future include all costs incurred in getting it ready for use or sale. Second, comparability is enhanced because one of the two accounting treatments that previously existed for those borrowing costs is removed. Third, the revision to IAS 23 achieves convergence in principle with US GAAP.
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© Graham Bishop
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