Concepts

Question 1

Directly attributable costs when buying PPE

Answer 1

Costs of site preparation
Initial delivery and handling costs
Installation and assembly costs
Professional fees such as for architects and engineers
The estimated cost of dismantling and removing the asset and restoring the site, to the extent that it is recognized as a provision under IAS 37 (provisions, contingent liabilities/assets)

Question 2

Costs not included when buying PPE

Answer 2

Costs of opening a new facility
Costs of relocating or reorganizing part/all of an entity’s operations
Initial operating losses, such as those incurred while demand for the item’s output builds up
Costs incurred while an item capable of operating in the manner intended by management has yet to be brought into use or is operated at less than full capacity
Costs of introducing a new product/service (incl. costs of advertising and promotional activities)
Costs of conducting business in a new location or with a new class of customer (incl. costs of staff training)
Administration and other general overhead costs