What is the treatment of borrowing costs under IAS 23?

IAS 23 mandates that borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset must be capitalized as part of the cost of that asset. A qualifying asset is one that takes a substantial period of time to get ready for its intended use or sale. Capitalization commences when expenditures and borrowing costs are being incurred and activities to prepare the asset are underway. It must be suspended during extended periods of interrupted development and cease when the asset is substantially complete.