In line with the continuing convergence of Philippine accounting standards with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), the Financial Reporting Standards Council (FRSC) (successor to the Accounting Standards Council) issued an Invitation to Comment on Proposed Amendments to IAS 23, Borrowing Costs.

The Exposure Draft results from the IASB’s comparison of IAS 23, Borrowing Costs, with the US standard SFAS 34, Capitalization of Interest Cost. The proposal marks another step in IASB’s joint short-term convergence project with the US Financial Accounting Standards Board (FASB).

The Exposure Draft proposes to require an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The option of immediately recognizing those borrowing costs as an expense would be eliminated. The IASB concluded that eliminating this option will improve financial reporting and will move closer to the recognition requirements of SFAS 34. The other provisions of IAS 23 were not reconsidered

The FRSC invites comments to the IASB Exposure Draft by September 14, 2006.

The FRSC Invitation to Comment may be downloaded form the PICPA website at www.picpa.com.ph and the IASB Exposure Draft, through the PICPA website or from the IASB website at www.iasb.org.