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Question
What are the criteria for capitalization of fixed assets?
What are the criteria for capitalization of fixed assets?
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Solution
Assets built by a business entity ought to incorporate all parts of cost, including materials, work, overhead, and interest cost, if pertinent. Any additions that increase the service capability of the resource/asset ought to be capitalised. Additions that are better arranged as repairs ought to be discounted when brought about.
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Assets built by a business entity ought to incorporate all parts of cost, including materials, work, overhead, and interest cost, if pertinent. Any additions that increase the service capability of the resource/asset ought to be capitalised. Additions that are better arranged as repairs ought to be discounted when brought about.
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