Theoretical FrameworkQuestion 4956 of 110
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"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]

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Detailed Solution & Explanation

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.

About This Chapter: Theoretical Framework

Paper

Paper 1: Accounting

Weightage

5-10%

Key Topics

Policies, Standards (Ind AS), Vocabulary

This chapter covers Policies, Standards (Ind AS), Vocabulary and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 5-10% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Revenue Expenditure

Expenditure incurred in the normal course of business operations whose benefit is consumed within the same accounting period. It is charged to the Profit & Loss Account.

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