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Unallocated revenue expenses

23 February 2009 3,339 views 3 Comments

Dear expert
After my joining i obseved that substetial amount remin unadjusted as unallocated revenue expenditure. how could i adjust the unallocated expenses with my accounts . if there is any relation with IAS 38 intangible assets. please give the suggetion with example and related IFRS
Thanks

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3 Comments »

  • admin (author) said:

    Hi Salome,
    The repair and maintenance will be expensed and not capitalized. If the lease was even a capital lease the repair and maintenance would still be expensed except where the the expenditure created an extension/expansion in the size, life, output, etc. of the asset.

    William
    Financial Analyst

    # 23 February 2009 at 9:41 am
  • admin (author) said:

    Hello Salome,

    The only other exception to what William wrote is when the repair and maintenance performed by the lessee company would result in reduction of future lease rentals. In that situation the repair and maintenance will satisfy the definition of an asset so can be capitalized.

    Definition of an Asset

    “The future economic benefit embodied in an asset is the potential to contribute, directly or indirectly, to the flow of cash and cash equivalents to the entity. The potential may be a productive one that is part of the operating activities of the entity. It may also take the form of convertibility into cash or cash equivalents or a capability to reduce cash outflows, such as when an alternative manufacturing process lowers the costs of production.”

    Benaya

    # 23 February 2009 at 12:27 pm
  • admin (author) said:

    Hello Salome,
    on top of what I wrote I wish to add that the amount to be capitalized should be equal to the reduction of future rentals. Any excess expenditure should be taken to the statement of comprehensive income (income statement).

    Benaya

    # 23 February 2009 at 12:40 pm

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