A company has a policy of upgrading their computers every 5 years. on 1st oct 2011 they spent 5m on new hardware, 0.3m on installation, 0.6m on operating system and 0.2m on software. from 1 oct 2011 to 1 april 2012 a new programme was also installed at 0.4m
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How would you account for these in finacial statements y/e 30th sept 2012
9y ago#1Hi,
You need to ask yourself if the initial costs are directly attributable to the installation of the asset.
Then once you either capitalised or expenses the items above then the new programme will need to be assessed for whether it enhances the economic benefits of the asset.
Have a think about the above and let me know what you think should be capitalised and expenses. Don't be afraid of getting wrong in public either as sometimes it is the best way to learn.
Look forward to hearing from you soon.
Thanks
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