A company's calculated effective borrowing rate is higher under IFRS than U.S.GAAP.

Name: A company's calculated effective borrowing rate is higher under IFRS than U.S.GAAP.
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Question

Quizplus · Accepted Answer

This is because under IFRS, interest and financing costs cannot be capitalized as part of an asset's cost, whereas under U.S. GAAP, certain interest costs can be capitalized. Therefore, the interest expense is higher under IFRS which leads to a higher effective borrowing rate.

A Company's Calculated Effective Borrowing Rate Is Higher Under IFRS