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IAS 38 states that incidental costs of purchase are included in the initial cost recognised. e.g – legal fees for purchase.
Is it same for IAS 16?Question :- Is the Legal fee incurred to ‘construct’ an item of property plant and equipment included in the cost of the asset in SOFP? Wont it be considered as an abnormal cost and treated as an expense in statement of P/L?
That’s a good question – never been asked it before. Unfortunately, it’s such a good question that, off the top of my head, I don’t know the answer.
If I were to have to guess, I would guess “No”. However, if you were to check out the IAS on the internet, you may find the treatment of legal costs on the acquisition of PPE is detailed for you in there
It would be good if, when you find out, you post again on this thread and then you will have educated me!
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