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Dear Sir,
I’d like to clarify below-mentioned case:
• $80,000 had been spent on the project A in the previous year. The project was capitalised in the previous year however, it has been decided to abondon this project at the end of the year.
Should we both reduce the cost of NCA and add the same amount to the expense in PL? Because in the Kaplan answer section, only the expense effect has been considered.
Thank you in advance for your answer!
Hi,
If the project has been abandoned then there will be no future benefit and the asset likely impaired to the recoverable amount. We’d need more information as to the recoverable amount in this question but if below the carrying value then it would reduce the carrying value and the other side of the entry taken through profit or loss.
Thanks
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