Section 20 – Borrowing Cost

[et_pb_section bb_built=”1″ admin_label=”Header – All Pages” transparent_background=”off” background_color=”#1e73be” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” custom_padding=”0px||0px|” global_module=”1221″][et_pb_row admin_label=”row” global_parent=”1221″ make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” custom_padding=”||5px|” allow_player_pause=”off” parallax=”off” parallax_method=”on” make_equal=”off” parallax_1=”off” parallax_method_1=”off”][et_pb_column type=”4_4″][et_pb_post_title admin_label=”Post Title” global_parent=”1221″ title=”on” meta=”off” author=”on” date=”on” categories=”on” comments=”on” featured_image=”off” featured_placement=”below” parallax_effect=”on” parallax_method=”on” text_orientation=”left” text_color=”light” text_background=”off” text_bg_color=”rgba(255,255,255,0.9)” module_bg_color=”rgba(255,255,255,0)” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_padding=”10px|||” /][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” custom_padding=”30px||0px|” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” background_color=”#ffffff” global_module=”1228″][et_pb_row admin_label=”Row” global_parent=”1228″ make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” custom_padding=”30px||0px|” allow_player_pause=”off” parallax=”off” parallax_method=”off” make_equal=”off” parallax_1=”off” parallax_method_1=”off” column_padding_mobile=”on”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” global_parent=”1228″ background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [breadcrumb] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”FRS 102 Main Menu” background_layout=”light” text_orientation=”center” use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”https://ie.frs102.com/members/premium-toolkit/” type=”big” color=”red”] Return to FRS 102 Main Index[/button] [/et_pb_text][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”FRS 105 Main Menu” background_layout=”light” text_orientation=”center” use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”https://ie.frs102.com/members/premium-toolkit/frs-105/” type=”big” color=”red”] Return to FRS 105 Main Menu[/button] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Video Heading – Sections” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_4″][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”Section Introduction Video Heading” background_layout=”dark” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid” text_text_color=”#ffffff” background_color=”#1e73be” custom_padding=”0px||0px|20px”]

Section 20 – Overview

[/et_pb_text][et_pb_video_slider admin_label=”Video File – Section Introduction” show_image_overlay=”hide” show_arrows=”on” show_thumbnails=”on” controls_color=”light”] [et_pb_video_slider_item admin_title=”Section Video Introduction” background_layout=”dark” src=”https://vimeo.com/202690072″] [/et_pb_video_slider_item] [/et_pb_video_slider][/et_pb_column][et_pb_column type=”1_4″][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″ global_module=”6795″][et_pb_row admin_label=”Row” global_parent=”6795″][et_pb_column type=”1_2″][et_pb_toggle admin_label=”New Section In Current Tab” global_parent=”6795″ title=”New Section In Current Tab” open=”off” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

[/et_pb_toggle][/et_pb_column][et_pb_column type=”1_2″][et_pb_toggle admin_label=”New Section in New Tab” global_parent=”6795″ title=”New Section in New Tab” open=”off” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

[/et_pb_toggle][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” custom_padding=”0px||0px|” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row” global_parent=”1284″ make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” gutter_width=”3″ padding_mobile=”off” allow_player_pause=”off” parallax=”off” parallax_method=”off” make_equal=”off” parallax_1=”off” parallax_method_1=”off” column_padding_mobile=”on”][et_pb_column type=”4_4″][et_pb_divider admin_label=”Divider” global_parent=”1284″ color=”#1e73be” show_divider=”on” divider_style=”solid” divider_position=”top” divider_weight=”1″ hide_on_mobile=”on” /][et_pb_text admin_label=”Section Downloads Heading” global_parent=”1284″ background_layout=”light” text_orientation=”left” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_padding=”0px||0px|” custom_margin=”0px||0px|”]

Section Downloads

[/et_pb_text][et_pb_tabs admin_label=”Section Downloads” global_parent=”1284″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [et_pb_tab title=”Quick Guide” tab_font_select=”default” body_font_select=”default” tab_font=”||||” tab_line_height=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em” body_font=”||||” body_line_height=”2em” body_line_height_tablet=”2em” body_line_height_phone=”2em”]

Downloads


OmniPro FRS 105 Quick Guide (11476 downloads )


FRS 105 Quick Guide - Section 20 (366 downloads )

[/et_pb_tab][et_pb_tab title=”Detailed Guide” tab_font_select=”default” body_font_select=”default” tab_font=”||||” tab_line_height=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em” body_font=”||||” body_line_height=”2em” body_line_height_tablet=”2em” body_line_height_phone=”2em”]

 

Downloads 


FRS 105 Detailed Guide: Section 20 Borrowing Costs (726 downloads )

Website Link

Section 20 Detailed Guide

[/et_pb_tab][et_pb_tab title=”Difference Guide” tab_font_select=”default” body_font_select=”default” tab_font=”||||” tab_line_height=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em” body_font=”||||” body_line_height=”2em” body_line_height_tablet=”2em” body_line_height_phone=”2em”]

Downloads 


FRS 102 35 Part Differences Quick Guide (859 downloads )


FRS 102 35 Part Differences Guide (581 downloads )


FRS 102 Differences on Transition Checklist (1119 downloads )


FRS 102 Differences on Transition Examples Appendix (1092 downloads )


Fillable Differences on Transition Checklist (866 downloads )

Website Links

Difference Guide – Leases

[/et_pb_tab][et_pb_tab title=”Case Studies ” tab_font_select=”default” body_font_select=”default” tab_font=”||||” tab_line_height=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em” body_font=”||||” body_line_height=”2em” body_line_height_tablet=”2em” body_line_height_phone=”2em”]

Downloads 


Transition case study FRS 102 to FRS 105 (12352 downloads )


Transition case study FRSSE to FRS 105 (12298 downloads )


Simple Transition Case Study FRS 102-FRS 105 (12284 downloads )


Simple Transition Case Study FRSSE/Old GAAP - FRS 105 (12267 downloads )

 

[/et_pb_tab] [/et_pb_tabs][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text” background_layout=”light” text_orientation=”justified” use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_id=” “]

Section 20: Borrowing Costs
Summary

Section 20 deals with the recognition and disclosures of borrowing costs. Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. It covers interest expense using the constant rate of return, deemed interest costs, finance charges in relation to finance leases and exchange differences arising from foreign currency borrowings.

What is new when compared to previous GAAPs – General?

Section 20 does not permit borrowing costs to be capitalised. Borrowing costs must be expensed.

What is new when compared to FRSSE/old GAAP?

Old GAAP/FRSSE does not have a specific standard on borrowing costs. While some guidance appears in FRS 15, this only relates to tangible fixed assets, therefore has a potentially narrower scope than Section 20.

Section 20 specifically deals with exchange differences on borrowing costs whereas under old GAAP this was not specifically addressed.

What are the key points?

Borrowing costs must be expensed.

A policy of capitalisation cannot be used.

No disclosure required other than including it in interest costs in the Profit and Loss Account.

What do accountants need to do?

Be aware of the differences between old GAAP/FRSSE/FRS 102 and Section 20.

Advise companies on the benefits and drawbacks of capitalising borrowing costs so that they can make an informed decision to move to FRS 105 or not.

Where entities adopted a policy of capitalisation under previous GAAP, then a transition adjustment will be required to derecognise the amount capitalised under old GAAP to the profit and loss reserves and an adjustment to reverse the depreciation recognised on these borrowing costs in the comparative year.

What do Companies need to do?

Be aware of the differences between old GAAP/FRSSE/FRS 102 and Section 20.

Where the company has previously applied a policy of capitalising qualifying borrowing costs, the company will need to assess whether the adjustment is material enough to expense these borrowing costs on transition to FRS 105.

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]