Cost
Cost is the amount given up to acquire or produce an asset, measured under the relevant accounting requirements. It can include more than the supplier’s quoted price: qualifying transport, installation and production costs may be included, while recoverable sales tax and discounts are excluded. Distinguish an asset’s cost from its later carrying amount and from an expense recognised in a period.
Worked example
Inventory priced at $1,000 less a $100 trade discount with $50 inbound freight has a purchase cost of $950, excluding recoverable tax.
Common mistake
Not every payment connected with a purchase is part of asset cost; ordinary training, selling costs and abnormal waste are generally excluded.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Direct | July 2027–August 2028 |
| ACCA | F3 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |