The Board continued its discussion of comments received from constituents on the exposure draft of Proposed Amendments to IAS 23 Borrowing Costs. The Exposure Draft proposed to eliminate the option to recognise immediately as an expense borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. The Board discussed suggestions made by constituents on the direction of the project.
The Board decided that it would issue the Amendments to IAS 23, as exposed, with one change—inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis will be excluded from the scope of IAS 23 for cost-benefit reasons. The wording for the scope exclusion will be taken from SFAS 34 Capitalization of Interest Cost. The Board also clarified that the scope of IAS 23 would exclude assets measured at fair value as proposed in the exposure draft, although it noted that entities were free to disclose information about borrowing costs that would have been capitalised if those assets had been measured at historical cost.
In addition, the Board acknowledged the need to consider the effective date of the amendment to minimise disruption for entities reporting in accordance with US GAAP.