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If 6mths before the yr end we capitalise expenses as development exp and the amortisation on develop exp is 20% straight line,do we also depreciate the one capitalised 6 months ago proportionately?
Q Candel(12/08)
I can imagine only one circumstance when you wouldn’t! Where the capitalised expenditure relates to a project which is still not yet complete and not therefore generating income, then we wouldn’t start amortising until the project was generating revenues.
But if the capitalised expenditure related to a project which is now generating benefits then, yes, we should amortise and, in the case you have given, we should amortise by 6 months. Again, exceptionally, if the examiner says something like “a full year in the year of purchase and none in the year of sale” then even though an asset had been owned for only, say, 2 months, we would depreciate it as though it had been acquired on the first day of the accounting period.
That’s more applicable to TNCA rather than INCA, but I suppose your examiner could use similar words in an INCA context
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