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    Question

    A company begins construction of a qualifying asset

    funded partly from general borrowings. Work was suspended for 5 months due to a strike. Should borrowing cost capitalisation continue during suspension?
    A Yes, borrowing costs are always capitalised. Correct Answer Incorrect Answer
    B No, suspend capitalisation during prolonged suspension. Correct Answer Incorrect Answer
    C Capitalise half of costs during suspension. Correct Answer Incorrect Answer
    D Expense all borrowing costs, regardless of suspension. Correct Answer Incorrect Answer
    E Capitalise if management intends to complete later. Correct Answer Incorrect Answer

    Solution

    Capitalisation of borrowing costs is suspended during extended periods when active development is interrupted. Resume when construction restarts.

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