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| Reader Comments on :: Allocation of Indirect Costs | |
| There is a confusion between clause 16 (b) and 19(d) of S 16 PPE Clause 16 says include all costs directly attributable to bringing asset to the location and condition necessary for it to operate and 19(d) says exclude admin costs. I think you should consider 2 situations: the construction phase of a project and a purchase of a stand alone asset 5 years later. While the hydro is under construction, you have a procurement and finance department. The only thing the company is doing is the construction so the costs of these departments is directly attributable. The costs will be accumulated and allocated to the final assets. 5 years later, the company is operating and procurement and finance are busy on tasks relating to operations. When an asset is purchased, it is just one more transaction in the year. Now we are saying that no allocation of the costs of the departments should be added to the asset costs. There may be identifiable costs that can be considered to be a direct cost of the purchase but salaries etc don't fall into this category. As always with BAS there is no hard and fast rules - judgment is required. I would be interested in comments on the above Posted By: Roy Whittington Posted on: 2018-05-15 11:57:13 |
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