Incidental operations

Learning objectives

• Distinguish an incidental operation from an activity necessary to bring the asset to the condition necessary for it to be capable of operating.L2, L3

Normative references

• IAS 16 §21Incidental operations not necessary to bring the asset to the necessary condition: income and expenses recognised in profit or loss.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• While waiting for construction of its future warehouse to begin, an entity rents out the bare site as a car park for six months. It collects receipts and incurs security costs. How should this income and these expenses be accounted for?L2