Section A

Which TWO of the following statements regarding the capitalization of borrowing costs under IAS 23 are correct?

Borrowing costs must be capitalized if they are directly attributable to the acquisition, construction, or production of a qualifying asset.

Borrowing costs can be capitalized for inventory that is manufactured in large quantities on a repetitive basis.

Capitalization must cease when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Capitalization commences as soon as the loan is drawn down, regardless of whether activities to prepare the asset have begun.