Under IAS 23, when are borrowing costs normally eligible for capitalization?
Correct answer: A. When funds finance an asset requiring substantial preparation
- A. When funds finance an asset requiring substantial preparation
- B. When funds are borrowed for any routine office expense
- C. When interest is paid after the asset is sold
- D. When the asset is acquired without any preparation
Explanation
Borrowing costs may be capitalized when they are directly attributable to a qualifying asset that takes a substantial period to get ready for use or sale. Ordinary expenses and ready-for-use assets do not meet this condition.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
Practise Depreciation and Non-Current Assets
33 free Depreciation and Non-Current Assets MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Depreciation and Non-Current Assets questions
Which principle should primarily determine the depreciation method selected for a non-current asset?
Under IAS 16, when is an item of property, plant and equipment recognized as an asset?
A company buys a production line that requires installation and testing before it can operate. Which treatment is normally appropriate for directly attributable installation and testing costs?
A non-current asset is revalued downward for the first time, with no previous revaluation surplus for that asset. Where is the decrease normally recognized?
If an impairment loss on a non-revalued machine is later reversed under IAS 36, what is the maximum carrying amount after reversal?