Sri Lanka Accounting Standards LKAS 23: Borrowing Cost Overview

This document provides an overview of Sri Lanka Accounting Standards LKAS 23 on borrowing costs, covering its introduction, scope, definition, and accounting treatment. It explains how borrowing costs are recognized, the scope of the standard, and the classification of borrowing costs. Additionally, it delves into qualifying assets and the accounting treatment for different types of borrowing costs. The standard aims to guide enterprises in accurately reporting borrowing costs related to assets.

• Sri Lanka
• Accounting Standards
• LKAS 23
• Borrowing Costs
• Qualifying Assets

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1. SRI LANKA ACCOUNTING SRI LANKA ACCOUNTING STANDARDS STANDARDS LKAS 23 LKAS 23 BORROWING COST Our Team Members 1. Hasitha 2. Siva 3. Sugirthan 4. Tharanga 5. Samith 6. Chathuranga 7. Samantha

2. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Content Introduction Scope Definition Accounting Treatment Disclosure

3. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Introduction Previous standard was SLAS 20. New standard came into effect from 01-01-2013 This standard prescribe the accounting treatment for borrowing cost Borrowing costs recognize as Directly attributable to asset Expense in the period

4. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Scope Apply on borrowing cost Does not deal with actual or imputed cost of equity. Not required to apply on a qualifying asset measured at fair value e.g. biological asset Inventories produced on large quantities on a repetitive basis

5. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Definition Borrowing Cost Borrowing cost are interest and other costs incurred by an enterprise in connection with the borrowing of funds.

6. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Borrowing Costs Include Interest on bank overdraft and borrowings Amortization of discounts or premiums on borrowings Amortization of ancillary costs Finance charges on finance leases Exchange differences arises from foreign currency in borrowing

7. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Borrowing cost can classified as follows Borrowing Cost Related with Qualifying asset Related with other borrowing cost

8. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Qualifying Assets A Qualifying asset is a asset that necessarily take a substantial period of time to get ready for its intended use or sale. Depending on the circumstances, any of the following may be qualifying assets: Inventories Manufacturing plants Power generation facilities Intangible assets Investment properties

9. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Recognition Capitalize Directly attributable to acquisition, construction or production of a qualifying asset as part of cost Expense Recognize other borrowing cost as an expense in the period in which it incurs

10. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Borrowing cost eligible for capitalization Capitalization rate Commencement of capitalization Suspension of capitalization Cessation of capitalization Partial Completion Impairment

11. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST Disclosure The amount capitalized during the period The capitalization rate used to determine the borrowing cost

12. SRI LANKA ACCOUNTING STANDARDS LKAS 23 BORROWING COST THANK YOU