SIC-2
Historical
Consistency–Capitalisation of Borrowing Costs
Addressed how consistently an entity could choose between expensing or capitalising borrowing costs directly attributable to qualifying assets. Withdrawn in 2007.
Historical Reference
SIC-2 was withdrawn in March 2007 when the IASB issued a revised IAS 23 Borrowing Costs, which made the capitalisation of borrowing costs mandatory and removed the option to expense them.
This page is retained for historical and comparative reference. Entities should refer to the current standard that superseded this interpretation for authoritative guidance.
Current Standard
IAS 23 Borrowing Costs 1
What SIC-2 Addressed (Historical)
What SIC-2 addressed
SIC-2 addressed how consistently an entity could choose between expensing or capitalising borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. It clarified whether an entity could apply different policies to different categories of assets or whether a single consistent policy was required.
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The Conclusion It Reached (Historical)
The conclusion it reached
SIC-2 concluded that an entity must apply its chosen accounting policy for borrowing costs consistently to all qualifying assets. An entity could either expense all borrowing costs or capitalise them as part of the cost of a qualifying asset, but the policy had to be applied on a consistent basis. Any change in policy was to be accounted for as a change in accounting estimate.
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Where This Guidance Lives Today
Where this guidance lives today
Superseded byIAS 23 Borrowing Costs
Why withdrawnThe 2007 revision made capitalisation mandatory, removing the option to expense
Current statusWithdrawn
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Glossary
Borrowing costs
Interest and other costs that an entity incurs in connection with borrowing funds, including interest expense calculated using the effective interest method.
Qualifying asset
An asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows
History & Development
Jan-1997
In January 1997 the Standing Interpretations Committee issued SIC-2 Consistency–Capitalisation of Borrowing Costs.
Apr-2001
In April 2001 the International Accounting Standards Board adopted SIC-2.
Minor consequential amendment to SIC-2
Mar-2007
In March 2007 the Board issued a revised IAS 23 Borrowing Costs which superseded SIC-2.
Superseded by revised IAS 23