Investor Presentaiton
CAT
THE INSTITUTE OF
CHARTERED ACCOUNTANTS OF SRI LANKA
Recognition
Example
Bee Ltd acquired a property that required renovation. This was
considered in agreeing the price for the property. Subsequently,
cost of Rs 10 million was incurred by Bee Ltd for the renovation
work
How to recognize renovation expenses?
Should be capitalised
Additional future benefits, can be reliably measured
21
TA
CA Measurement at initial recognition
THE INSTITUTE OF
CHARTERED ACCOUNTANTS OF SRI LANKA
Owned property
Initially at cost
ā Purchase price
Directly attributable expenses
The following costs cannot be capitalised:
Costs relating to market studies undertaken before the
purchase of property
Internal indirect costs (in-house lawyer's expenses)
Start-up costs (unless they are necessary to bring the property
to the condition necessary...)
Operating losses incurred before the IP achieves its planned
level of occupancy
Abnormal costs
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