IASB proposals for convergence on borrowing costs

25 May 2006

The IASB published proposals to improve the accounting treatment for borrowing costs. The proposals are set out in an Exposure Draft of proposed amendments to International Accounting Standard (IAS) 23 Borrowing Costs. The Exposure Draft would require an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. The option to recognise immediately borrowing costs as an expense would be removed.

The IASB believes that the elimination of one of the two options in accounting for borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset would improve financial reporting and would result in information that is more comparable between entities.

From 5 June the text of the Exposure Draft will be available freely from the IASB’s Website.

Press release

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