IAS 23

Would anyone answer the following  relating to (IAS 23 Borriwing Costs)

IAS 23 Borriwing Costs says that  " A Qualifyg Asset is an asset that necessarily takes a substantial period of time to get ready for its inteded use or sale".

What is meant by 'substantial period'.

How it is determined that an asset is Qualifying Asset.

Replies (3)

Normally a period of 12 months is taken as substantial period.  Hoever even a lower or higher period can be taken as substatial period if it's justified.  Thus it depends on your own analysis of the asset.

Hence asset wich crosses the limit of substantial period will be a qualifying asset. 

mohitis absl. correct

The assessment of Substantial Period is based on subjective judgement here and may vary from entity to entiy. While recognising borrowing cost in these cases the concept of materiality must be kept in mind.

 

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