IAS23 Borrowing Costs - Final EFRAG comment letter

16 November 2006 IAS 23 Amendments International Accounting Standards Board 30 Cannon Street London EC4M 6XH UK Dear Sir/Madam Re: Exposure Draft of Proposed Amendments to IAS 23 Borrowing Costs On behalf of the European Financial Reporting Advisory Group (EFRAG), I am writing to comment on the Exposure Draft of Proposed Amendments to IAS 23 Borrowing Costs. This letter is submitted in EFRAG’s capacity of contributing to the IASB’s due process and does not necessarily indicate the conclusions that would be reached in its capacity of advising the European Commission on endorsement of the definitive IFRS on the issue. Firstly we would like to re-emphasise the fact that we support the IFRS/US GAAP convergence project, although we do not believe it appropriate to pursue convergence regardless of the cost. However, after having studied the proposals we have two concerns: 1 Although the effect of the proposals if implemented will be that companies reporting under IFRS will, like companies reporting under US GAAP, be required to capitalise any borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, the amounts that will be capitalised will continue to be different (because the proposals address only one of the differences between IFRS and US GAAP and do not, for example, address the differences that exist as to the composition of the costs and the calculation techniques). 2 The ...