When must borrowing costs be capitalized under IAS 23, and how do you calculate the amount for a project financed from the group's general borrowings?

Borrowing costs directly attributable to acquiring or constructing a qualifying asset — one that necessarily takes a substantial period to get ready, like a plant, a development property or certain intangibles — MUST be capitalized; expensing is not a choice under IFRS. Specific borrowings are simple: actual interest incurred minus investment income on temporarily surplus funds. General borrowings need the capitalization rate: the weighted average rate on the group's general debt pool, applied to the expenditure on the asset — with capitalized amounts capped at total borrowing costs actually incurred. Time boundaries matter: capitalization starts when expenditure, borrowing costs and preparation activities are all underway; it SUSPENDS during extended periods where active development pauses; and it CEASES when the asset is substantially ready — not when it starts operating profitably. Group nuance: in consolidated statements the rate comes from external group debt, since intragroup interest eliminates — a subsidiary capitalizing interest on an intercompany loan reverses at group level and re-measures against the group's external rate. Inventory manufactured in large quantities on a repetitive basis is the standard exclusion worth naming.