IAS 16Chapter 5Lesson 2
Dismantling, proceeds before intended use, incidental operations and self-constructed assets
Step 1 of 10Learning objectives
Go deeper+1 deeper insight · +2 calculations · +2 journal entries
Four situations that complete initial cost: the obligation to dismantle and restore, which is added to cost; sales of items produced while the asset is being made ready, which go to profit or loss without reducing cost; incidental operations, which stay in profit or loss; and assets built by the entity, measured on the same principles as an acquisition, with no internal profit and no abnormal costs.
25 minNot started
Learning objectives
- Identify when a dismantling obligation enters the cost of the asset, calculate the discounted amount and record the initial entry.
- Account for the sale of items produced while the asset is being made ready: proceeds and cost in profit or loss, cost of the asset unchanged.
- Distinguish an incidental operation from an activity needed to make the asset ready.
- Determine the cost of an asset built by the entity, leaving out internal profit and abnormal costs, and spot the cross-reference to IAS 23.