Looking for a little clarity here. I understand that expenses that generate benefit in future periods can be capitalized, but I’m unclear on specific examples of what can and can’t be capitalized . Any help?
ftwcfa Wrote: ------------------------------------------------------- > Looking for a little clarity here. I understand > that expenses that generate benefit in future > periods can be capitalized, but I’m unclear on > specific examples of what can and can’t be > capitalized . Any help? Buy an equipment - if the equipment is expected to provide benefits for this period only, it has to be expensed … else capitalized While constructing a project - you borrow money to fund it … you have to pay interest … interest could be expensed in every period or capitalized and becomes part of your project’s value that will be depreciated over time
Thanks Omar - that’s a good example. Any other obvious ones I’m missing, or is capx for PPE the main one?
R&D could also be an example for capitalising expenses. However, both IFRS and US GAAP set specific guidance on when R&D expenses should be capitalised (relating to feasibility of the product and the intend to use or sell it, if I remember right).