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Borrowing cost
how borrowing cost can be recognized in financial statements.
An entity shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. An entity shall recognise other borrowing costs as an expense in the period in which it incurs them.
why 2 different treatments are allowed. why not to expense out all borrowing cost?
actually borrowing cost is allowed to capitalize for those items which can be completed for more then 1 year. it will not be fair if it is not allowed and company has to expense out the borrowing cost while borrowing was made only for the construction of that item.
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