"The cost of Property, Plant and Equipment comprises of any cost directly attributable to bring the asset to the location and condition necessary f...

Question

"The cost of Property, Plant and Equipment comprises of any cost directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in a manner intended hy the enterprise". Give any five examples of such ‘directly attributable costs'. [Dec. 2022, 5 Marks]

Accepted Answer

Option : Correct Option. Solution: Examples of directly attributable costs to assets are: (a) Cost of employee benefits arising directly from acquisition or construction of an item of property, plant & equipment. (b) Cost of site preparation. (c) Initial delivery and handling costs. (d) Installation and assembly costs. (e) Cost of testing whether the asset is functioning properly, after deducting the net proceeds from selling the items produced while testing (such as samples produced while testing). (f) Professional fees e.g. engineers hired for helping in installation of a machine.

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