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Capital Expenditures

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Capital Expenditures

  • This topic has 3 replies, 2 voices, and was last updated 9 months ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 3, 2021 at 5:42 pm #639872
    StefanosG
    • Topics: 20
    • Replies: 15
    • ☆

    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.

    November 7, 2021 at 8:57 am #640121
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6165
    • ☆☆☆☆☆

    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

    November 8, 2021 at 5:13 pm #640234
    StefanosG
    • Topics: 20
    • Replies: 15
    • ☆

    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.

    November 13, 2021 at 8:26 am #640530
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6165
    • ☆☆☆☆☆

    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

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