Dismentalling of Building or Asset
Friday, January 2, 2009
As per Para 16 of IAS - 16 (Property, Plant and Equipment)
The cost of an item of property, plant and equipment comprises:
(a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
(b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
(c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
As per Para 17 (b) of IAS - 16 one of the examples of Directly attributable costs are the costs of site preparation.
Therefore, dismentalling charges can be capitalised and can be cosidered as cost of acquisition of property in case another structure is commissioned. Otherwise there is no harm to charge the expense as repair and maintenance.
Labels: accounting
posted @ 3:14 PM,
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