PIPFA Final Level Practice Questions - PIPFA Final Level Examination Exam

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Which of the following describes the correct accounting treatment for borrowing costs directly attributable to the acquisition of a qualifying asset under IAS 23?

They must be recognized as an expense in the profit or loss statement in the period incurred. They must be capitalized as part of the cost of that asset. They may be either capitalized or expensed, depending on the entity's accounting policy choice. They must be deferred and amortized over a maximum period of five years.

Correct Answer:

They must be capitalized as part of the cost of that asset.

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