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Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2011 Whether Excavation cost for laying the foundation of an equipment needs to be capitalised as a part of equipment cost as per the requirement of component accounting under IFRS?

1.Excavation Cost
2. Foundation Cost
3. Equipment purchase Cost

Will the sum total of the above components is The Total Cost of the equipment?

Vivek Raju P

Vivek Raju P (Expert)
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19 January 2011 Yes all the three costs will form part of the cost of the fixed asset under IFRS, as they are very much relavant for bringing the asset to the working condition.

Apart from this IFRS also mandates that asset retirement obligations basically the removal or dismantling costs of the asset at the end of its life need to be estimated and discounted using the appropriate rate and added to the cost of the asset upfront.

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2011 Thanks Mr Raju for your response

But Please elaborate further on this as this is not much clear.

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