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Capitalising Expenditure

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Capitalising Expenditure

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
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  • March 31, 2021 at 12:56 am #615552
    j2mtt
    Participant
    • Topics: 4
    • Replies: 0
    • ☆

    Decorating PPE which causes the company to increase it’s price and thus earning revenue. Would that be capitalised?

    April 1, 2021 at 5:40 pm #615702
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7172
    • ☆☆☆☆☆

    Hi,

    No, decorating is restoring the PPE and is not enhancing the asset. If there were significant changes made structurally then it might be capitalised but decorating is not likely to increase the price of an asset or the ability to earn more revenue as it is just keeping it at the market rate.

    Thanks

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