PPE

Question 1

The cost of of an asset capitalized as PPE includes what three components?

Answer 1

1. Purchase price + import duties - discounts and rebates
2. Any costs in the future of dismantling and removing PPE and restoring site on which it is located
3. Any costs to bring the asset to the location and condition necessary for it to be operated

Question 2

Under ASPE, amortization of PPE is greater of what two amounts?

Answer 2

Cost - Residual value (over useful life of asset) OR Cost - Salvage value (over total life of asset)

Question 3

When can you capitalize asset costs

Answer 3

If it increases useful life of asset or increases efficiency.

Question 4

How are borrowing costs treated under ASPE and IFRS

Answer 4

Under IFRS, borrowing costs are capitalized to the asset amount, under ASPE they expense it.