Technical uncertainties in and practical implications of the capitalisation of borrowing costs in South Africa / Leani van Staden

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dc.contributor.author Van Staden, Leani en_US
dc.date.accessioned 2011-08-31T12:21:37Z
dc.date.available 2011-08-31T12:21:37Z
dc.date.issued 2011 en_US
dc.identifier.uri http://hdl.handle.net/10394/4636
dc.description Thesis (M.Com. (Accountancy))--North-West University, Potchefstroom Campus, 2011.
dc.description.abstract The International Accounting Standards Board (IASB) and the United States Financial Accounting Standards Board (FASB) have reaffirmed their commitment to accomplishing the convergence of International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Practice (US GAAP), following their March 2010 progress report. Among the standards subject to this convergence project, is IAS 23 - Borrowing Costs. Taken at face value, the convergence of IAS 23 (IFRS) and SFAS 34 (US GAAP), and looking at convergence in general, the idea is productive and beneficial. It will lead to more comparative information as it eliminates the differences. The downside, however, could very easily be that convergence might just be taking place for the sake of convergence, and that the end result might not necessarily lead to more comparative and cost effective information. When specifically considering the convergence of the two borrowing costs standards (SFAS 34 and IAS 23), it is clear that differences remain even after their convergence, and therefore it does not promote comparability. The revision of IAS 23 might actually have been more costly and less beneficial, rather than the other way around. The first article in this dissertation claims that the mandatory capitalisation of borrowing costs is more costly than not, and that the IASB did not adequately consider the cost implications in their decision to change IAS 23, as well as that the benefits obtained from the capitalisation of borrowing costs are not that noticeable in practice. Participants in this study also seemed to agree that the application of IAS 23 is fairly difficult. Delving deeper into the technical aspects of IAS 23, a number of questions also arise relating to its application. This appears to be substantiated by the findings in the second article where instances were identified where the opinions of the participants relating to, for instance, what would be regarded as a 'substantial period of time', were divided. Differences relating to the above above viii may lead to one person capitalising borrowing costs, while another in the same situation would not. On the upside, a few instances were identified where participants were not as divided in their views. Therefore, although there appear to be some uncertainties within IAS 23, there are fewer than one would have expected. In summary, the revised IAS 23, in other words, the mandatory capitalisation of borrowing costs on qualifying assets, was viewed by participants as being more costly and difficult to apply than not and they felt that some technical uncertainties do exist within IAS 23. Recommendations have been made in this dissertation based on the useful information obtained. en_US
dc.publisher North-West University
dc.subject Borrowing costs en_US
dc.subject Capitalisation en_US
dc.subject International Accounting Standards (IAS) en_US
dc.subject Statement of Financial Accounting Standards (SFAS) en_US
dc.subject International Accounting Standards Board (IASB) en_US
dc.subject International Financial Reporting Standards (IFRS) en_US
dc.subject Qualifying assets en_US
dc.subject Convergence en_US
dc.subject United States Generally Accepted Accounting Principles (US GAAP) en_US
dc.subject Interest en_US
dc.subject Technical uncertainties en_US
dc.subject IAS 23 en_US
dc.subject SFAS 34 en_US
dc.subject Leenkoste en_US
dc.subject Kapitalisering en_US
dc.subject Kwalifiserende bates en_US
dc.subject Harmoniëring en_US
dc.subject Rente en_US
dc.subject Tegniese onsekerhede en_US
dc.title Technical uncertainties in and practical implications of the capitalisation of borrowing costs in South Africa / Leani van Staden en_US
dc.type Thesis en_US
dc.description.thesistype Masters en_US

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