Chapter 25 - Property, Plant & Equipment Flashcards
Can rental payments during a fitting out period be capitalised?
Rental payments during a fitting out period should not be capitalised as, under IAS 16 Property, Plant and Equipment, such payments are not costs that are directly attributable to bringing the fixtures and fittings into their intended use, nor are they finance costs.
Company Y owns 2 freehold properties, using the cost model.
Both properties are used by the company as administrative offices.
The directors would like to show one property at at market value and the other at depreciated historical cost.
Is this allowable?
The company uses the properties and therefore they are not ‘investment properties’ under IAS 40 Investment Property.
IAS 16 Property, Plant and Equipment does not allow companies to take a selective approach to the valuation of non-current assets within the same class. Therefore, if WELLER wishes to move to fair value, both properties will have to be shown at fair value.
