The AASB issued ED 149 “Proposed Amendments to AASB 123 Borrowing Costs”, based on an equivalent ED released earlier this week by the IASB as part of the IASB/FASB convergence project. The ED proposes to remove the option of immediately recognising borrowing costs as an expense, thereby requiring an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset  
 
Support for ED 149: borrowing costs to only be capitalised  
The Institute’s preliminary analysis of the IASB’s exposure draft (ED) of IAS 23 “Borrowing Costs”, and the AASB’s equivalent ED 149 would suggest that the proposals be supported.  
 
It is proposed that the current option in IAS 23/AASB 123 to expense borrowing costs be deleted. Therefore, such borrowing costs will be capitalised as part of the cost of the asset when it is probable that they will result in future economic benefits to the entity. These costs can be measured in the period in which they are incurred. Other borrowing costs will continue to be recognised as an expense in the period in which they are incurred.  
 
The Institute's submission to the IASB can be downloaded from here.