Compute the costs that can be capitalized as per IAS 16 from the given informati

ID: 2590716 • Letter: C

Question

Compute the costs that can be capitalized as per IAS 16 from the given information PARTICULARS Amount in AED Cost of the plant Installation and assembly costs Costs of opening a new facility Cost of site preparation 8,000,000 700,000 300,000 900,000 Borrowing costs to the extent permitted by LAS 23, Borrowing Costs150,00 Cost of introducing a new product or service 30,000 Interest charges paid to supplier for deferred credit 20,000 Net proceeds from sale of productsising from test production 10,000 500,000 Estimated dismantling costs to be incurred after 5 years

Explanation / Answer

Cost to be Capitalized as per IAS 16

Particulars

Amount in AED

Cost of the Plant

8,000,000

Installation and assembly cost

700,000

Cost of site preparation

900,000

Borrowing cost

150,000

Estimated dismantling cost to be incurred afer 5 years

500,000

Consultant's Fee

170,000

Total Cost to be capitalized

10,420,000