The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board within the International Federation of Accountants (IFAC), is seeking comments on its proposed changes to IPSAS 5, Borrowing Costs, set forth in Exposure Draft 35, Borrowing Costs (Revised 200X).
Most notably, ED 35 proposes amendments to reflect that in many circumstances the capitalization of borrowing costs as part of the cost of an asset is inappropriate for public sector entities. This view, a departure from both IPSAS 5 and the International Accounting Standards Board's International Accounting Standard 23, Borrowing Costs, is an evolution from public sector consideration of the issue. The ED proposes that entities recognize borrowing-related expenses, such as interest or loan origination fees, during the period in which they are incurred.
The ED also proposes, however, that where entities borrow funds specifically to acquire, construct or produce a qualifying asset, the entity may capitalize those costs as part of the cost of that asset.
The document is available at www.ifac.org/EDs. Comments are due by Jan 7.