I shall be grateful if anyone can advise me on the following:
An Investment Fund (thereafter the “fund”) was established in April 2009 with the aim of investing, on behalf of the subscribers, on the local stock exchange.
The fund incurred the following expenses, classified as “Initial set up fees” amounting to US 5600, at its creation in the statement of financial position (Balance sheet);
(i) Payment to a consultant for legal advise amounting to US 1700
(ii) License fees amounting to US 3400
(iii) Other set up fees amounting to US 500
In the prospectus of the fund, it is written that “Initial set up fees are capitalized and amortized over of period of 5 years”. My questions are as
1- Is it correct to amortize this cost over 5 years or the amount of US 5600 should be expensed?
2- Which IFRS’s is relevant for this?
A clear and precise answer on this issue would be highly appreciated.
Thank in advance.