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P2-D2.
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hm1995
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hello
in question 24, it asks what is the total cost to be capitalised for the factory.
and the answer shows that it includes the cost of the land.
why is the cost of land included for factory cost? isnt land supposed to be a different line of asset? also factory cost will be despreciated, and land does not depreciate. so including it in the factory cost it will also form part of depreciation. i do not really understand it.also i would like to understand why is a gain or loss on investment property go to profit or loss and not to revaluation surplus? since the gain or loss on the property has not realised until its sold.
P2-D2
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Hi,
The factory will appear within the land and buildings category or PPE, hence why land has been added to the total cost. You are correct that land is not depreciated, so when depreciating the asset the calculation will need to exclude the cost of the land.
Have you watched the videos on IP? You should find your answer to the question in there. Let me know if you cannot find it.
Thanks
hm1995
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