An assesment of borrowing costs in terms of accounting standards, IFRS for SME?s and tax legislation

Companies need funds in order to carry on their activities. They use their equities and their foreign resources to get these funds. Foreign sources are provided from credit institutions and corporations and from the cash and capital markets. These sources bring extra costs to company such as; interest rates, foreign exchange and interest. All of these costs are called borrowing costs. Accounting standards are published to provide accurate, reliable, understandable and comparable presentation in financial statements.Companies, who are under the obligation of public accountability, report their borrowing costs according to IAS 23 published by IASB. On the other side companies, who are not under the obligation of public accountability, report their borrowing costs according to IAS 23 or IFRS.for SME?s. Borrowing costs should be included as an expense in the financial statements according to both of these standards. However, IAS 23 Standard of Borrowing Costs; refers to a qualifying asset that needs capitalization of assets. IFRS for SME?s emphasizes that borrowing costs should be followed in expense accounts.In this thesis, borrowing costs in IFRS for SME and IAS 23 The Standard of Borrowing Costs which are published by IASB; are shown and investigated on a sample company. According to investigation of sample company, IFRS for SME Borrowing Costs is an easy standard to implement in terms of low tax which is advantageous. This standard is a huge step for creation and standardization of comparable to the financial statements across the country. This standard is important to make comparable financial statements and distribution of standardization around the country.