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Can someone clarify me on whether to capitalise watchman expenses when constructing a building.
This is 1/5 of the total cost of a building in progress.
Is this a directly attributable cost or not?
As per IAS 16 Par.17 (a) it states that: costs of employee benefits (as defined in IAS 19 Employee Benefits) arising directly FROM the construction or acquisition of the item of property, plant and equipment are directly attributable costs.
ThanksGive me that again …. the cost of a watchman equates to 20% of the construction cost to date! Are you kidding?
If the costs to which you refer are directly attributable, then capitalise. But do they REALLY equate to 20%?
And what has pension costs got to do with this – it’s surely only tangentially relevant to the origial question
Oh yes…for the moment watchmen expenses (day and night) amount to 20% for a building still in progress.Weird?
I usually thought that watchmen expenses (unlike direct labour like mason/carpentor) are indirect costs but as per IAS 16 Par 17a, it says that all costs arising FROM the construction of an asset are directly attributable costs (am i right).What do u think?I think that this (very well paid) watchman is a directly attributable expense of building whatever is being constructed. Agreed, the watchman is not hands-on like a carpenter of plumber but is nevertheless an integral part of the costs of the asset under construction
But that’s just my opinion. Personally, I’m tending towards capitalisation but could (if I wanted) persuade myself that it should be expensed
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