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WorkpaperIAS 16 — Property, Plant and EquipmentL1 · L2 · L3 · L4

Capitalised or expensed expenditure

2 missions10 sections to document45 min

Prepared by: AI-assisted draft
Reviewed by: Not reviewed — human review required
Status: Published

Objective of the workpaper

Classify each item of expenditure of an asset project between the cost of the asset and the expenses of the period, supporting the classification by the nature of the expenditure and the date the asset is capable of operating. For a self-constructed asset, complete the dedicated section. Totals and entries are calculated from the tables.

10 sections · 28 blocks · 3 calculations · 2 entries

IAS 16 §12
IAS 16 §16
IAS 16 §17
IAS 16 §19
IAS 16 §20
IAS 16 §21
IAS 16 §22
IAS 16 §20A

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

2 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity

Acquisition of a machining centre

Case task documented here

Determine the initial cost of the machine and the total expenditure to be recognised as an expense.

Inputs

Project or asset concerned
TextRequired
Date the asset is capable of operating as intended
DateRequired
20X1-04-01
Expenses settled in cash
Number
8,000
Expenses still payable
Number

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Classification of the expenditure

Analysis

IAS 16 §12IAS 16 §16IAS 16 §17IAS 16 §19IAS 16 §20AIAS 16 §21

Expenditure included in cost
TableRequired
6,000 | 9,000 | 14,000 | 3,000 | 5,000
Expenditure recognised as an expense
Table
4,000 | 2,500 | 1,500
Costs excluded from the cost of the asset
Checklist
- Opening a new facility
- Introducing a new product or service, including advertising
- Business in a new location or with a new class of customer, including staff training
- Administration and other general overheads
- Costs incurred once the asset is capable of operating
- Incidental operations not necessary to bring the asset to working condition
- Day-to-day servicing
Boundary between cost and expense
JudgmentRequired
Classification supported by the evidence / Classification to review (insufficient evidence)
Rationale: facts relied on, analysis, alternative rejected
TextRequired
Proceeds and cost of items produced before intended use (recognised in profit or loss)
Text

Totals

Calculations

IAS 16 §16IAS 16 §17IAS 16 §19

Total included in cost
CalculationRequired
37,000
Expenditure included in cost
Total recognised as an expense
Calculation
8,000
Expenditure recognised as an expense

Self-constructed asset

Calculations

IAS 16 §22

Materials
Number
Direct labour
Number
Directly attributable overheads
Number
Borrowing costs capitalised under IAS 23
Number
Internal profit to eliminate
Number
Construction costs settled in cash
Number
Construction costs still payable
Number
Cost of the self-constructed asset
Calculation
0
Materials ; Direct labour ; Directly attributable overheads ; Borrowing costs capitalised under IAS 23 ; − Internal profit to eliminate

Journal entries

Entries

Recognition of the expenditure not capitalised
Entry
Account Debit Credit
Expenses of the period 8,000
Payment 8,000
Construction costs of the asset
Entry
Debit Asset under construction ← Cost of the self-constructed asset ; Credit Payment ← Construction costs settled in cash ; Credit Payables ← Construction costs still payable

Account	Debit	Credit
Expenses of the period	8,000
Payment		8,000

Cessation of capitalisation

Judgment

IAS 16 §20

Date capitalisation ceases
JudgmentRequired
Date supported (commissioning, sign-off) / Date to review
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the amount capitalised and the expenses of the period
ConclusionRequired

Impact on the financial statements

FS impact

Impact by heading, derived from the entries above (the Notes row points to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the registry)
References

Checks and financial statement impact

The total capitalised is determinedPass
The expense entry balancesPass
The construction entry balancesNot evaluated

Assets: -8,000
Liabilities: 0
Profit or loss: -8,000
OCI: 0
Equity: -8,000

File and entity

Professional file: construction and commissioning of a production site

Case tasks documented here

Determine the cost of the self-constructed building and the expenditure to recognise as an expense.
Propose the entries for the construction, the expenses and the transfer to property, plant and equipment on commissioning.
Decide the date capitalisation ceases and depreciation starts, and the treatment of the test sales, the parking income and the grant.

Inputs

Project or asset concerned
TextRequired
Date the asset is capable of operating as intended
DateRequired
20X1-10-01
Expenses settled in cash
Number
248,000
Expenses still payable
Number

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Classification of the expenditure

Analysis

IAS 16 §12IAS 16 §16IAS 16 §17IAS 16 §19IAS 16 §20AIAS 16 §21

Expenditure included in cost
TableRequired
Expenditure recognised as an expense
Table
80,000 | 150,000 | 18,000
Costs excluded from the cost of the asset
Checklist
- Opening a new facility
- Introducing a new product or service, including advertising
- Business in a new location or with a new class of customer, including staff training
- Administration and other general overheads
- Costs incurred once the asset is capable of operating
- Incidental operations not necessary to bring the asset to working condition
- Day-to-day servicing
Boundary between cost and expense
JudgmentRequired
Classification supported by the evidence / Classification to review (insufficient evidence)
Rationale: facts relied on, analysis, alternative rejected
TextRequired
Proceeds and cost of items produced before intended use (recognised in profit or loss)
Text

Totals

Calculations

IAS 16 §16IAS 16 §17IAS 16 §19

Total included in cost
CalculationRequired
Expenditure included in cost
Total recognised as an expense
Calculation
248,000
Expenditure recognised as an expense

Self-constructed asset

Calculations

IAS 16 §22

Materials
Number
2,400,000
Direct labour
Number
900,000
Directly attributable overheads
Number
300,000
Borrowing costs capitalised under IAS 23
Number
100,000
Internal profit to eliminate
Number
120,000
Construction costs settled in cash
Number
3,480,000
Construction costs still payable
Number
100,000
Cost of the self-constructed asset
Calculation
3,580,000
Materials ; Direct labour ; Directly attributable overheads ; Borrowing costs capitalised under IAS 23 ; − Internal profit to eliminate

Journal entries

Entries

Recognition of the expenditure not capitalised
Entry
Account Debit Credit
Expenses of the period 248,000
Payment 248,000
Construction costs of the asset
Entry
Account Debit Credit
Asset under construction 3,580,000
Payment 3,480,000
Payables 100,000

Account	Debit	Credit
Expenses of the period	248,000
Payment		248,000

Account	Debit	Credit
Asset under construction	3,580,000
Payment		3,480,000
Payables		100,000

Cessation of capitalisation

Judgment

IAS 16 §20

Date capitalisation ceases
JudgmentRequired
Date supported (commissioning, sign-off)
Date supported (commissioning, sign-off) / Date to review
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the amount capitalised and the expenses of the period
ConclusionRequired

Impact on the financial statements

FS impact

Impact by heading, derived from the entries above (the Notes row points to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the registry)
References

Checks and financial statement impact

The total capitalised is determinedNot filled in this instance
The expense entry balancesPass
The construction entry balancesPass

Assets: -148,000
Liabilities: 100,000
Profit or loss: -248,000
OCI: 0
Equity: -248,000

Inputs

Project or asset concerned
TextRequired
Date the asset is capable of operating as intended
DateRequired
Expenses settled in cash
Number
Expenses still payable
Number

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Classification of the expenditure

Analysis

IAS 16 §12IAS 16 §16IAS 16 §17IAS 16 §19IAS 16 §20AIAS 16 §21

Expenditure included in cost
TableRequired
Expenditure recognised as an expense
Table
Costs excluded from the cost of the asset
Checklist
- Opening a new facility
- Introducing a new product or service, including advertising
- Business in a new location or with a new class of customer, including staff training
- Administration and other general overheads
- Costs incurred once the asset is capable of operating
- Incidental operations not necessary to bring the asset to working condition
- Day-to-day servicing
Boundary between cost and expense
JudgmentRequired
Classification supported by the evidence / Classification to review (insufficient evidence)
Rationale: facts relied on, analysis, alternative rejected
TextRequired
Proceeds and cost of items produced before intended use (recognised in profit or loss)
Text

Totals

Calculations

IAS 16 §16IAS 16 §17IAS 16 §19

Total included in cost
CalculationRequired
Expenditure included in cost
Total recognised as an expense
Calculation
Expenditure recognised as an expense

Self-constructed asset

Calculations

IAS 16 §22

Materials
Number
Direct labour
Number
Directly attributable overheads
Number
Borrowing costs capitalised under IAS 23
Number
Internal profit to eliminate
Number
Construction costs settled in cash
Number
Construction costs still payable
Number
Cost of the self-constructed asset
Calculation
Materials ; Direct labour ; Directly attributable overheads ; Borrowing costs capitalised under IAS 23 ; − Internal profit to eliminate

Journal entries

Entries

Recognition of the expenditure not capitalised
Entry
Debit Expenses of the period ← Total recognised as an expense ; Credit Payment ← Expenses settled in cash ; Credit Payables ← Expenses still payable
Construction costs of the asset
Entry
Debit Asset under construction ← Cost of the self-constructed asset ; Credit Payment ← Construction costs settled in cash ; Credit Payables ← Construction costs still payable

Cessation of capitalisation

Judgment

IAS 16 §20

Date capitalisation ceases
JudgmentRequired
Date supported (commissioning, sign-off) / Date to review
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the amount capitalised and the expenses of the period
ConclusionRequired

Impact on the financial statements

FS impact

Impact by heading, derived from the entries above (the Notes row points to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the registry)
References