Hello sir, hope u are well.
sir, I would highly appreciate if u give a little explanation about Major overhaul and Repair, for every say, 5 years. And how to treat in the SFP and SPL.
thanks in advance
Ask the Tutor ACCA FR
IAS 16
5y ago#1Hi,
If we know we need to overhaul the asset every 5 years, then we would depreciate what we expect the cost to be be over 5 years. So, if we bought an asset for 100m and it was going to cost us 5m in 5 years time to overhaul it (say) then we would depreciate teh 5m over the 5 years, and depreciate the rest of the asset's cost of 95 (100 - 5) over the life of the asset, which is likely to be longer, say 20 years.
When we come to carry out the overhaul in 5 years, the new cost is then capitalised as part of the asset and then depreciated over the period to the next overhaul.
Thanks
understood. Thank u so much
5y ago#3I'm surprised we don't see more of it appear in the exam. If it were to appear then it would be more likely to be in section A or B.
Thanks
I'll kill it. If it pups up in the exam. Thanks for sharing the Exam hints.
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