Construction of the Roads Inside the factory area are capitalized or not.
Widening of the Road Inside the Factory are capitalized or not
CA Ashish kasera (Mumbai) (143 Points)
04 January 2021Construction of the Roads Inside the factory area are capitalized or not.
Widening of the Road Inside the Factory are capitalized or not
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 04 January 2021
These are subsequent expenses which fall under PPE and if they are bringing future economic benefits, they are capitalised.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 04 January 2021
Hi Mr Ashish sry I did not read the IndAS 16 as I was in a hurry previously. I have two revelations today
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. Therefore, costs incurred in using or redeploying an item are not included in the carrying amount of that item.
the above things means, all directly attributable costs are included into the PPE and stopped once Asset construction is completed (can’t add any subsequent costs to capitalise)
then later on you wanted to increase road widtth to have easy access to vehicles- this standard
Recognition- Stripping activity asset
Measurement- Initially at cost model and subsequently at cost or revaluation. Similar to PPE cost less accumulated amortisation less impairment
Presentation- Asset side, a separate asset and cannot be included into the cost of carrying amount of PPE.
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