5 - PPE Flashcards

1
Q

PPE acquires for safety or environmental reasons?

A

Must be capitalised

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2
Q

Subsequent expenditure can be capitalised if?

A

Increased the benefits of the asset

If does not Dr Expense e.g repairs
Less sig parts that last less than a year expense

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3
Q

Purchase price of PPE includes?

A

Import duties
Non refundable purchase taxes

Deduct - trade discounts and rebates

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4
Q

Costs directly attributable to getting the asset to the location and condition intended for use?

A
Employee benefits 
Site preparation
Delivery and handling
Installation
Testing - proceeds from selling items produced
Professional fees
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5
Q

Initial estimate of the cost of dismantling?

A

Capitalise
Obligation incurred when item acquired

Dr PPE
Cr provision

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6
Q

Don’t capitalise?

A
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
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7
Q

Borrowing costs?

A

IAS23 requires we must capitalise borrowing costs directly attributable to the acquisition - take a substantial period

PPE constructed
Intangible asset development
Maturing whisky

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8
Q

Specific vs general borrowings?

A

Specific - actual interest rate used
General - weighted average of borrowing costs

Amount of borrowing costs capitalised should not exceed actual for period

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