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 summation such as cash payment for the learnedness of pluss, duty paid on the import of pluss at the time of import, transportation cost incurred for bringing the summation to the desired post and place. Although, there might be cost incurred related to the acquisition of the assets but it might not be relevant and thus not capitalized. Examples of such cost are cost of opening a impertinent production facility, cost of advertising and promotional activities and other indirect and administrative be. The capitalization of the cost is halt when the asset is the location or place for the intended use. Cost such as initial operate losses, initial cost incurred by the company when it is operating below the capacity and cost or resettlement or reorganization of some or all of the holdings of the company, is similarly not capitalized. The expenditure incurred can also be capitalized in the cost of the asset subsequent to the acquisition of the assets. These costs primarily include portentous maintenance or overhauling expenditure. These costs are only recognized in those circumstances when the future sparing 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 acceptation Cost. 2 At the initial recognition of any item of property, ground and equipment, if the payment for an item of property, jell 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 di ssimilar to the asset universe disposed off. In these cases, the cost is measured at the fair value of the asset being acquired. But this measurement technique would not be applicable if the asset exchange transaction lacks moneymaking(prenominal) 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 revaluation 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 previously recorded in the balance sheet, the increase is credited to equity and is represented as