5 - PPE Flashcards
PPE acquires for safety or environmental reasons?
Must be capitalised
Subsequent expenditure can be capitalised if?
Increased the benefits of the asset
If does not Dr Expense e.g repairs
Less sig parts that last less than a year expense
Purchase price of PPE includes?
Import duties
Non refundable purchase taxes
Deduct - trade discounts and rebates
Costs directly attributable to getting the asset to the location and condition intended for use?
Employee benefits Site preparation Delivery and handling Installation Testing - proceeds from selling items produced Professional fees
Initial estimate of the cost of dismantling?
Capitalise
Obligation incurred when item acquired
Dr PPE
Cr provision
Don’t capitalise?
Opening a new facility Intro a new product New business in new location Admin or other general overheads Initial op losses and costs of relocating or reorg
Borrowing costs?
IAS23 requires we must capitalise borrowing costs directly attributable to the acquisition - take a substantial period
PPE constructed
Intangible asset development
Maturing whisky
Specific vs general borrowings?
Specific - actual interest rate used
General - weighted average of borrowing costs
Amount of borrowing costs capitalised should not exceed actual for period