• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

September 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for December 2025 exams.
Get your discount code >>

Vancouver group m/j 16 part B

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Vancouver group m/j 16 part B

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Kim Smith.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • July 23, 2018 at 4:14 pm #464375
    zkaay
    Participant
    • Topics: 212
    • Replies: 98
    • ☆☆☆

    Hi sir,

    In note 1

    Several old warehouses were modernised during the year. The modernisation involved the

    1) redesign of the layout of each warehouse,

    2) the installation of new computer systems, and the

    3) replacement of electrical systems.

    Could u plz make it clear for me which items should be capitalized and which should be expensed and why.

    July 23, 2018 at 5:03 pm #464377
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8346
    • ☆☆☆☆☆

    In reverse order:
    3. Generally, if you see “replacement” of something that is a part of a larger asset – then you can capitalise the cost of replacement as long as the asset recognition criteria are met (i.e. probable future economic benefits and reliable measurement of cost) but you would also have to derecognise the carrying amount of what it is that is replaced. (It could be that the old electrical system has no carrying amount.)
    2. Initial cost, per IAS 16, includes directly attributable cost – these include “installation and assembly costs”. The computer systems are clearly new (so would be capitalised) and, if material, it would be appropriate to include the installation costs as well as the purchase costs.
    1. Here you can exercise your judgement – it really depends on what you can reasonably assume about the asset recognition criteria being met. Does it have a reliable measurement of cost? Yes – this is quite likely if you paid someone to do the design. It is probably that future economic benefits will flow to Vancouver? One might argue yes simply because if it didn’t have economic benefits – why would you bother? For example, a new layout may enhance efficiency of warehouse operations.

    Something else you have to remember when capitalising subsequent costs is that the overall carrying amount (here of the warehouses) must not exceed recoverable amount. This effectively puts a ceiling on the maximum amount that can be carried in the SoFP.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • meridian on Exam technique in ethics questions – ACCA SBR lecture
  • joetetteh2 on Totnes – ACCA SBR Question – Spreadsheet Exercise 3 – CF
  • grishap84@gmail.com on PM Chapter 14 Questions More variance analysis
  • Nullu on Practice Question Klopp
  • Emeru on The Statement of Financial Position and Income Statement (part a) – ACCA Financial Accounting (FA) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in