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Initial Costs capitalization

14 May 2010 2,933 views 2 Comments

Hi sir. My question is that the costs of negotiation and traveling for acquiring an assets by management, what about the costs whether it should be capitalized or expensed

in case;

a. it is certain from the very day that the assets would be acquired.

b. it is uncertain that the asset would be acquired before finalizing of the deal.????

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2 Comments »

  • ifrslist
    ifrslist said:

    [New Post] Initial Costs capitalization – http://www.ifrslist.com/2010/05/initial-...
    via Twitoaster

    # 14 May 2010 at 10:33 am
  • Wallace Consulting Group said:

    That’s an interesting question. Looking at IAS 16.16, those costs aren’t a direct part of the purchase price, but it might be ambiguous whether they’re 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.” Travel/negotiation costs aren’t included in the examples in IAS 16.17 though and personally I’d see them more as operating expenses, incurred before it’s established that an asset exists and therefore written off. Could see how it might be argued differently though depending on the circumstances…

    # 14 May 2010 at 9:20 pm

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