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IAS 16

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS 16

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • January 29, 2018 at 6:45 pm #433874
    lavan073
    Participant
    • Topics: 5
    • Replies: 2
    • ☆

    In accordance with ias 16 initial estimates of dismantling and removing cost can be capitalised for an asset but in case of replacing the asset, are those costs considered as removing and dismantling cost for the old assets or as site preparation cost for the new asset?

    January 29, 2018 at 7:20 pm #433879
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23334
    • ☆☆☆☆☆

    The estimation of dismantling and removal costs are capitalised at the start of the life of the asset that is to be dismantled

    Those capitalised estimated costs are then written off over the life of that asset by way of annual depreciation

    The site preparation costs for any new (or replacement) asset are capitalised together with the cost of that asset AND its estimated dismantling costs and removal costs

    Is that any clearer?

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  • The topic ‘IAS 16’ is closed to new replies.

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