This Exposure Draft of Proposed Amendments to IAS 23 Borrowing Costs has been published by the International Accounting Standards Board as part of its Short-term Convergence project.
The objective of the Short-Term Convergence project (which the Board is undertaking jointly with the Financial Accounting Standards Board (FASB) in the United States) is to reduce differences between International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (US GAAP). The project focuses on differences that can be resolved in a relatively short time and can be addressed outside current and planned major projects. It is one strand of the Board’s broader objective of convergence of accounting standards around the world.
The proposed amendments to the requirements in IAS 23 for the accounting treatment of borrowing costs result from the Board’s consideration of FASB Statement No. 34 Capitalization of Interest Cost (SFAS 34). The proposed amendments eliminate the option in IAS 23 of recognising borrowing costs immediately as an expense, to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset. The Board concluded that eliminating this option will improve financial reporting and will move closer to the recognition requirements of SFAS 34. The Board has not reconsidered the other provisions of IAS 23.
