At its meeting in November 2005, the Board decided to eliminate from IAS 23 Borrowing Costs the option of immediate recognition as an expense of borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset. In January the Board discussed the transitional provisions of the proposed amendments.
The Board noted that if an entity had not previously gathered the necessary information for capitalisation of borrowing costs, getting this retrospectively might be impracticable. Therefore, the Board decided that:
- existing IFRS users should apply the proposed amendments prospectively to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is after the effective date. They should be permitted to apply the proposed amendments to borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is after any elected date before the effective date.
- first-time adopters should apply transitional provisions equivalent to those available to existing IFRS users.
- the comment period for the exposure draft should be 120 days.