<s>[INST] What is the treatment of borrowing costs? [/INST] ​The treatment of borrowing costs shall depend on the purpose for which it has been incurred. It may either be capitalised with the actual cost of the asset or recognised as an expense in the profit and loss account. The capitalisation of borrowing cost shall apply for that portion of the borrowing cost which is otherwise allowable as a deduction under the Act.​ </s>