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Hi, Part b of question 60 Carsoon in BPP Kit.
The answer stated that: “General and administrative costs cannot be capitalised unless these costs are specifically chargeable to the customer under the contract”.
My question, why these cost can be capitalised, I am NOT sure that if the contract asset is required by IAS 16 or not ? If yes, these costs are not be capitalised
It is very unlikely that you could recharge these costs.
If you could – the answer is trying to say that you would not to expense the costs until you recognise the revenue. In the meantime they would sit in the SFP as a contract asset.
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