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capitalisation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › capitalisation

  • This topic has 8 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 9 posts - 1 through 9 (of 9 total)
  • Author
    Posts
  • November 29, 2015 at 2:50 pm #286148
    sasha
    Member
    • Topics: 99
    • Replies: 141
    • ☆☆☆

    sir ” training to employee and recruiting cost” doesn’t it get capitalised if that training is for the equipment that is extremely specialised.?

    November 29, 2015 at 10:06 pm #286232
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    Does your employer control you? Are you able to leave your employment and work for someone else?

    Well, if you’re not controlled by your employer, you don’t satisfy the definition of an asset so you’re not an asset of the employer and your training costs are expensed, not capitalised

    November 30, 2015 at 12:31 am #286263
    sasha
    Member
    • Topics: 99
    • Replies: 141
    • ☆☆☆

    thank you sir

    November 30, 2015 at 2:34 am #286276
    sasha
    Member
    • Topics: 99
    • Replies: 141
    • ☆☆☆

    ” depreciation of plant used specifically on developing a new produtct can be capitalised as a part of development costs”? sir how this statment is correct.

    that depreciation should be spread out and written of in p/l account as expense as well as should be deducted from ”cost of plant’ in SOFP.

    so how it is supposed to be capitalised? 🙁 it is deducted from original cost ,isn’t it 🙁

    November 30, 2015 at 9:03 am #286331
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    Instead of debiting property, plant and equipment account, we’ll debit development costs account with the cost of the plant

    Then, when the project starts to generate revenue, we’ll start writing off those development costs including the plant that was acquired specifically for the development

    December 2, 2015 at 1:14 am #286857
    sasha
    Member
    • Topics: 99
    • Replies: 141
    • ☆☆☆

    sir i am confused.. sir does it mean unless the project starts to generate revenue, we added the amortization amount with the cost and debited in SOFP?

    December 2, 2015 at 8:36 am #286906
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    We don’t begin to even think about amortisation until the project is up and running ….. so there’s no concept of adding the amortization to the asset! That would make no sense at all

    Amortisation isn’t involved at all until revenue is being generated

    Ok?

    December 2, 2015 at 11:49 am #286955
    sasha
    Member
    • Topics: 99
    • Replies: 141
    • ☆☆☆

    okay sir 🙂

    December 2, 2015 at 12:27 pm #286967
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    You’re welcome

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