Capitalized cost of borrowing, what is the calculation method of capitalization of borrowing cost?

Personally, I think that we can compare the characteristics of capitalization with period costs to understand this problem, because the benefit period of the expenditure is not only the period of expenditure, but also the period after the expenditure, and the beneficiary object is also specific, so it is capitalized. The beneficiary of the special loan is specific, and its expenditure can only be limited to the capitalized asset, and the relevant investment income is only used as a deduction for the capitalized borrowing cost, that is to say, the income and expenses of the loan can only be borne on the corresponding asset; The beneficiary object of the general loan is not fixed, so if the built asset occupies the general loan, it can only be determined according to its occupation amount and time occupied, and the occupation time is determined according to how much time it occupies the loan within a year (here it is processed according to 360 days), that is, the loan amount * interest rate * occupation time 360, and if the loan of the previous year has not been repaid, it means that the loan is still occupied, for example, the asset built last year consumed 3 million, Then when the loan is not repaid in the next year, it will occupy 300At the same time, because there may be many kinds of general loans, and their interest rates may be different, the weighted average method is adopted to determine the interest rate.

As for the interest on general loans, it is difficult to distinguish the object of its income, so it is treated as a deduction of period expenses (financial expenses).

1.Determination of the amount of capitalization of interest on borrowings.

1) Determination of the capitalization amount of special borrowings.

Capitalized amount of special borrowings Actual interest expense during the capitalization period Interest income on deposits during the capitalization period.

Amount of special borrowing expense Actual interest expense during the expense period Interest income from deposits during the expense period.

2) General borrowing.

Capitalized amount of interest expense on general borrowings Weighted average of asset expenditures in excess of special borrowings Capitalization rate of general borrowings occupied.

Wherein: the capitalization rate of the general borrowings occupied The weighted average interest rate of the general borrowings occupied.

The sum of the interest actually incurred in the current period of the occupied general borrowings The weighted average of the principal of the occupied general borrowings.

Among them: the weighted average of the principal of the general loan occupied (the principal of each general loan occupied, the number of days occupied by each general loan in the current period, and the number of days when the deadline is changed).

There are three conditions for the capitalization of borrowing costs, namely, the expenditure of the asset has been incurred, the borrowing cost has been incurred, and the construction or production activities necessary to bring the asset to the intended usable or marketable state have begun; Once these three conditions are met, the borrowing costs can be capitalized.

Expenditure on assets has been incurred refers to the expenditure of assets that meet the conditions for capitalization of enterprises that have been purchased or built in a simple manner, including expenditures incurred in the form of cash payments, transfer of non-cash assets and assumptions of interest-bearing debts. Borrowing costs refer to the money borrowed specifically for the acquisition, construction or production of assets that are eligible for capitalization.

Meaning of capitalization of borrowing costs If the borrowing is used for fixed asset investment, the borrowing interest and other financial expenses should be recorded in the construction cost of the investment project before the project is put into production, and the cost is part of the value of the fixed assets, and the borrowing cost is capitalized, which is a component of the asset.

The capitalization of borrowing costs is used for investment in fixed assets, which is a component of assets, and borrowing costs that cannot be capitalized and should be included in the current profit or loss should be accounted for through the "financial expenses" account; The accounting treatment related to the capitalization of borrowing costs is cumbersome and generally requires special accounting to be recorded.

There are three conditions for capitalization of borrowing costs:

The first condition is that the asset expenditure has been incurred. This condition refers to the fact that the expenditure incurred by the enterprise in the acquisition or construction of assets eligible for capitalization, including the outfall in the form of cash payments, transfer of non-cash assets and assumption of interest-bearing debt.

The second condition is that the borrowing costs have been incurred. This condition refers to the borrowing costs of the funds borrowed specifically by the enterprise for the acquisition, construction or production of assets eligible for capitalization, or the borrowing costs of the general borrowings that are occupied.

The third condition is that the construction or production activities necessary to bring the asset to its intended usable or marketable condition have commenced. It mainly refers to the physical construction or production of assets that meet the conditions for capitalization, such as the installation of the main equipment, the actual construction of the plant, etc.

Only if the above three conditions are met at the same time, the relevant borrowing costs can be capitalized, and as long as one of the conditions is not met, the borrowing costs cannot be capitalized.

Hello I am Mr. Yi The conditions for the capitalization of borrowing expenses are: 1 The expenditure of assets has been incurred. Expenditures incurred on assets include expenditures incurred in the form of cash payments, transfers of non-cash assets or assumptions of interest-bearing bonds for the acquisition, construction or production of assets eligible for capitalization.

2 Borrowing costs have been incurred. 3. The acquisition, construction or production activities necessary to bring the assets to the intended usable or marketable state have begun.

The first condition for capitalization of borrowing costs is that the expenditure on the asset has been incurred

The second condition is that the borrowing costs have been incurred. The third condition is that the construction or production activities necessary to make the asset ready for use or saleable have commenced.

The first module refers to the expenditure incurred by the enterprise in the acquisition or construction of assets eligible for capitalization, including expenditures incurred in the form of cash payments, transfer of non-cash assets and assumption of interest-bearing debts.

The second condition refers to the borrowing costs of the special borrowed funds for the acquisition, construction or production of assets eligible for capitalization, or the borrowing costs of the general borrowings occupied.