GTD Inc. owns a rental property for which it borrowed funds to complete renovations. Renovations were to be completed in 20X0, but have been put on hold due to a shortage in labor and therefore there has been no active development for six months.
Under IAS 23, determine whether capitalization should start, suspend, or stop.
Suspend
Stop
Start
Does not qualify for capitalization
Under IAS 23, Borrowing Costs, the costs of borrowing are capitalized as part of the cost of a qualifying asset if they are incurred to acquire or enhance a specific asset and the activities necessary to prepare the asset for its intended use are interrupted, such as in this case where renovations have been suspended. Given that the renovation work on the rental property has been temporarily halted due to external factors (labor shortage), the borrowing costs related to the project should be suspended from capitalization until the project resumes. Therefore, under the circumstances described, the appropriate action under IAS 23 would be to:
Suspend
