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replacement parts capitalise

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › replacement parts capitalise

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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  • August 9, 2021 at 9:07 am #630876
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir can i know why replacement parts of an asset are capitalised?

    inspection i understand needs to be capitalised as the asset will be inoperable without those inspections.

    but am struggling understand why replacement parts are capitalised? the asset would still be operable without those parts being replaced! so then capitalise replacement parts?

    August 9, 2021 at 10:02 am #630880
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    If an airline buys a new engine for a plane it is PPE and will be capitalised and depreciated.

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