COMM321 Chapter Notes - Chapter 10: Capital Account, Deferral, Deferred Income
16 Apr 2017
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Under ifrs, borrowing costs that can be directly attributed to acquisition, construction, or development of qualifying assets should be capitalized. Under aspe, management has a choice of capitalizing or expensing such costs. Assets that take a substantial period of time to get ready for intended use or sale: may include inventories, items of ppe; investment properties; or intangible assets. Assets ready for use or sale when acquired. Assets produced over a short period of time. Assets not undergoing development to get them ready for use. Capitalization period begins when all three conditions are present: expenditures for the asset have been made, activities for readying the asset are in progress, borrowing costs are being incurred. Capitalization continues for as long as these three conditions exist. Capitalization ends when asset is substantially complete and ready for use. Interest amount must be directly related to asset.
