Borrowing costs

Borrowing costs must be capitalized in respect of certain qualifying assets, if those assets are measured at cost. Therefore, an entity
will capitalize borrowing costs on a self-constructed item of PP& E if it meets the criteria in IAS 23 – Borrowing Costs, as discussed
at 4.1.5 below. [IAS 16.22].

Entities are not required to capitalize borrowing costs in respect of assets that are measured at fair value. This includes revalued
PP& E which is measured at fair value through Other Comprehensive Income (‘OCI’). Generally, an item of PP& E within scope of
IAS 16 will only be carried at revalued amount once construction is completed (see 4.1.4 below), so capitalization of borrowing costs
will have ceased. This is not necessarily the case with investment property in the course of construction. The cost of the asset,
before adopting a policy of revaluation, will include capitalized borrowing costs. However, to the extent that entities choose to
capitalize borrowing costs in respect of assets still in the course of construction that are carried at fair value, the methods allowed by
IAS 23 should be followed.