Borrowing Costs

Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.

Borrowing costs may include:

• Interest and commitment charges on bank borrowings and other short-term and long- term borrowings;
• Amortisation of any discounts or premiums relating to borrowings;
• Amortisation of ancillary costs incurred in connection with the arrangement of borrowings;
• Finance charges in respect of assets acquired under finance leases or under other similar arrangements; and
• Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

An enterprise should not apply AS 16 to borrowing costs directly attributable to the acquisition, construction or production of inventories that are manufactured, or otherwise produced, in large quantities on a repetitive basis over a short period of time, since such inventories are not qualifying assets.