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sparepart and equipment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › sparepart and equipment

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • October 26, 2015 at 5:56 am #278938
    kunal10
    Member
    • Topics: 18
    • Replies: 28
    • ☆

    Hi sir,

    I have a query on sparepart and equipment.
    How should we value sparepart and equipment ,if we are usind wac should it be separetly?

    Regards,
    Kunal

    October 26, 2015 at 7:00 am #278951
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    There’s not likely to be much of an average for a spare part, nor for equipment.

    I suggest the equipment should be capitalised on acquisition (unless the entity has a policy of expensing below an immaterial amount)

    Spare parts – probably immaterial – even though they may be very expensive in themselves, in the context of the asset for which they are spares they are probably immaterial. I suggest that they too are expensed as they are purchased

    October 26, 2015 at 8:31 am #278975
    kunal10
    Member
    • Topics: 18
    • Replies: 28
    • ☆

    Hi mike,

    I think you didn’t get my meaning. The equipment and spare part are inventory.
    Each is valued separetly using wacc.
    Issue raised by auditor both should have been valued in one not separetly.

    Example you have equipment A and same equipment as spare part. Auditors opinion is to value them in one not separetly.

    Want to know your opinion.

    October 26, 2015 at 11:47 am #279012
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    “you have equipment A and same equipment as spare part”

    How do you expect me to give you a sensible answer when you give me half a question????

    You say yourself – they are the same – so treat then the same. They’re both inventory and should be dealt with as one

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