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A transport company recently fixed Air conditioner into its transport vehicles and as a result of this, the transport fare increased and the company is still able to maintain its existing customers.
should i capitalize this cost of A/C or expense itThe units are separate identifiable units. They have an expected useful life of greater than one year (I generally use this as a guide although it is not a hard and fast rule).
Recall IAS 16:
1. future economic benefit flowing to the entity – increased fares as a result of A/C units
2. separate identifiable units – a/c in bus
3. cost can be measured reliably – units separately purchased from buses
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