Borrowing costs
A) are never included in the costs of inventories.
B) must only be included in inventory cost if they relate to inventories produced in large quantities and on a repetitive basis.
C) are capitalized if incurred to finance activities that help bring inventories to a condition available for sale.
D) none of the above

Question

Quizplus · Accepted Answer

Borrowing costs can be capitalized if incurred to finance activities that help bring inventories to a condition available for sale. These costs are included in the cost of inventories and are recognized as an expense in the same period that the inventories are sold. Option A is incorrect because borrowing costs can be included in the cost of inventories. Option B is incorrect because borrowing costs can be capitalized regardless of the type of inventory produced. Option D is incorrect because one of the options is correct.

Borrowing Costs