Criteria for Capitalization of borrowing costs:
FRS 123 prescribes that borrowing costs can be capitalized on qualifying assets.
Borrowing costs definition are interest and other costs incurred in relation to borrowing of funds. This includes interest amortization of discounts, premiums and ancillary costs relating to borrowings.
For qualifying asset, it is an asset that takes a substantial period of time to be ready for intended use or sale.
Accounting treatment of borrowing costs:
Limitations to the amount of borrowing costs to be capitalized: