IAS-23 - Calculating capitalization cost

(0) Share

Report

Posted on by Community Member

Hi All,

I have come across a requirement which is related to calculating capitalization cost and moving it to asset along with project WIP cost through elimination. Capitalization interest is calculated on Project WIP cost which is yet to be moved to an asset and the interest rates are fixed for a financial year

The capitalization interest is calculated every month on Work In Progress amount and the cumulative amount is eliminated at the end of the month to an asset,

Do we have any such functionality to calculate capitalization interset in system while executing Investment project?

Sharing some a blog that explains IAS-23

https://www.readyratios.com/articles/ifrs/ias-23-borrowing-costs.html

Regards,

Nakul

I have the same question (0)

All responses (3)

Answers (1)

Sort by

Verified answer

Ludwig Reinhard Microsoft Employee on at

Like (0)

Report
Copy link

Link copied!

Hello Nakul,

If you have borrowing costs that can directly be assigned to an investment type project then you will have a project category for recording those costs.

When doing that, the costs are accumulated in the WIP account first and then moved to the fixed asset once you eliminate it.

That's what the standard functionality supports.

Where there is no standard functionality available for is the calculation of the capitalization costs.

You have to do this either somewhere outside of AX or make use of integrations/modifications.

As an example, if you would operate D365FO you could leverage the PowerPlatform for that purpose.

For older AX2012 systems, a system modification would be required.

Hope that answers your question.

Best regards,

Ludwig

Was this reply helpful? Yes No
Community Member on at

Like (1)

Report
Copy link

Link copied!

Thanks Ludwig for your response, we are using D365 FO so I thought of taking WIP Project report on monthly basis and to caculate the interest manually, later this interest will be tagged to a category in expense journal and posted in projects (As per your suggestion). This will later eliminated to an asset.

Was this reply helpful? Yes No
Suggested answer

Ludwig Reinhard Microsoft Employee on at

Like (0)

Report
Copy link

Link copied!

Hi Nakul,

You can do this of course manually.

If there is a lot of work involved, think about creating an electronic report and using the PowerPlatform. ... might accelerate things a bit.

All the best,

Ludwig

Was this reply helpful? Yes No