CAF 1 Financial Accounting & Reporting | Q2 – Borrowing Costs | Autumn 2026 | Sir Taha Popatia

This video (0:00 - 27:56) provides a detailed walkthrough of an accounting problem related to IAS 23 (Borrowing Costs) from the ICAP Autumn 2026 past paper. The presenter, Sir Taha Popatia, explains the step-by-step process of calculating the borrowing costs to be capitalized for a qualifying asset, emphasizing key accounting standards and common pitfalls for students. Key Concepts Covered: Commencement of Capitalization (11:34 - 13:02): Explains that capitalization begins only when three conditions are met: expenditure is incurred, borrowing costs are incurred, and active development activities (including necessary technical and administrative work) are underway. Specific vs. General Borrowing (1:19 - 6:20): Details the priority of using specific loans first, followed by general borrowings using a weighted average interest rate. Suspension Period (17:27 - 21:00): Discusses why borrowing costs should not be capitalized during extended delays, such as a labor strike (16 July – 31 August), as these are not considered part of the normal development process. Cessation of Capitalization (22:21 - 23:22): Highlights that capitalization must stop when the asset is substantially complete (30 November), even if minor decorative or administrative work continues until 31 December. Investment Income (3:03 - 3:50): Clarifies that interest income earned on temporarily invested, unutilized specific loan funds must be deducted from the total borrowing costs to be capitalized. #CAF1 #FAR #BorrowingCosts #FinancialAccountingAndReporting #Autumn2026 #ICAP #TahaPopatia #CAStudents #CAFStudents #PastPaperPractice #ExamPreparation #IQSF #IQSchoolOfFinance