Fixed Tangible Dissertation Example | Topics and Well Written Essays - 2000 words

Fixed Tangible - Dissertation Examplence sheet of the company. The cost include cost incurred at the time of purchase of addition such as cash stipend for the acquisition of additions, duty paid on the import of assets at the time of import, transportation cost incurred for bringing the asset to the desired location and place. Although, there might be cost incurred related to the acquisition of the assets but it might non be relevant and thus not capitalized. Examples of such cost argon cost of opening a new production facility, cost of advertising and promotional activities and other indirect and administrative be. The capitalization of the cost is stopped when the asset is the location or place for the intended use. Cost such as initial operating losses, initial cost incurred by the company when it is operating below the capacity and cost or relocation or reorganization of some or all of the holdings of the company, is also not capitalized. The expense incurred can also be cap italized in the cost of the asset subsequent to the acquisition of the assets. These costs primarily include significant maintenance or overhauling expenditure. These costs argon only recognized in those circumstances when the future economic benefits associated with that expenditure lasts for more than one year. Other than general maintenance expenditure, there are other costs which can also be capitalized in the cost of the asset. For example borrowing cost, incurred on acquiring to the acquisition of qualifying assets is also recognized in the cost of the assets acquired. This capitalization is accounted for in accordance with the IAS 23 Borrowing Cost. 2 At the initial recognition of any head of property, plant and equipment, if the payment for an item of property, plant and equipment is deferred, interest at market rate must also be recognized. In certain circumstances, the asset might be acquired in an exchange for another asset, which could be similar or dissimilar to the a sset being disposed off. In these cases, the cost is measured at the unclouded time value of the asset being acquired. But this measurement technique would not be applicable if the asset exchange transaction lacks commercial substance or the fair value of the assets involved in the transaction cannot be determined reliably. In case where the fair value of the asset acquired is not reliably measured, the cost of the asset, at which it is recognized in the balance sheet of the company, is the fair value of the assets given up. Subsequent to the initial measurement, the IAS 16 has allowed to record the asset at accounting models which are Cost Model Revaluation Model 1 In the cost model, the asset is carried at cost less accumulated depreciation and impairment losses, if any. Whereas, according to the brushup model, the items are carried at revalued amount. The revalued amount of an item of property, plant and equipment is its fair value at its revaluation date. According to IAS 16, when an item of property, plant and equipment is revalued, the entire class of assets to which that item belongs, is also revalued. In case where a company conducts the revaluation of an item of property plant and equipment, and it results in an increase in the amount at which it was antecedently recorded in the balance sheet, the increase is credited to equity and is represented as