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Borrowing Costs, Investment Properties Pensions
Borrowing Costs, Investment Properties Pensions
Borrowing Costs, Investment Properties Pensions
INVESTMENT PROPERTIES
PENSIONS
IAS 23 BORROWING COSTS
Refer to text for questions
29.1 Introduction
Capitalisation means that a cost is included in the cost of an asset
rather than being expensed as finance to the statement of profit or
loss when the cost is incurred.
€/£ €/£
Bank / Accrual X
29.2 What Costs are Included in
Borrowing Costs?
Borrowing costs include both interest costs and other costs
that are incurred in relation to loans obtained by an entity.
These costs include:
interest costs at the nominal rate of interest;
interest costs at the effective interest rate;
finance cost on leases; and
exchange differences arising on foreign currency
borrowings.
29.2 What Costs are Included in
Borrowing Costs?
Borrowing costs must be directly attributable to
the acquisition, construction or production of
qualifying asset.
Actuarial gains and losses and the return on plan assets are
shown in other comprehensive income.
The defined benefit liability
The defined benefit liability which is recognised in
the statement of financial position at the end of an
accounting period is equal to the present value of
the defined benefit obligation at the end of the
period, less the fair value of the plan assets at the
end of the period.
If the result of this calculation is negative, it is
recognised as an asset.
Disclosures relating to defined
benefit plans
The main disclosures required by IAS19 with regard to
defined benefit plans are:
• a general description of the type of plan and any risks
to which the entity is exposed because of the plan
• a reconciliation of opening and closing balances for
the defined benefit obligation and for the plan assets
• the significant actuarial assumptions used to
determine the present value of the defined benefit
obligation
• information which describes how the entity's defined
benefit plan may affect its future cash flows.
Other long-term employee
benefits
Other long-term employee benefits include:
(a) long-term paid absences such as long-service leave
and sabbatical leave
(b) long-term disability benefits
(c) profit-sharing and bonus payments