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P2-D2.
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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Capital Expenditures
Dear Tutor,
If we hired a real estate agency to find us a building to buy would we capitalize that fee or not?
Thank you.
Hi,
Why would you capitalise it? You could capitalise the legal fees as part of the purchase but you don’t know what building specifically that you are going to purchase so it can’t be directly attributable to the one building. It would have to be expensed.
Thanks
Hello,
So if we already bought the building and the invoice was issued later then we could capitalize the cost correct? Since we now have a building to attribute the capitalization cost.
Thank you.
No, as that would be retrospectively trying to capitalise the costs. At the point in time the cost was not giving any economic benefit to the business, it was merely searching for a property.
Thanks