IAS 16Chapter 5Lesson 1
Initial cost of an item of property, plant and equipment
Step 1 of 9Learning objectives
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What goes into the cost of an item of property, plant and equipment at initial recognition: the net purchase price and the costs directly attributable to getting it ready, and only up to the point where the asset can operate as intended. What stays out: recoverable VAT, training, advertising, general overheads, waiting costs and start-up losses.
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Learning objectives
- Explain why an item of property, plant and equipment is initially measured at cost and what that cost covers.
- Distinguish directly attributable costs, included in cost, from expenditure that remains an expense.
- Determine when the recognition of costs stops, then calculate the cost and record the entry.