When calculating depreciation for a new project lets say it costs USD 25000 and there are installation costs of USD 5000 do we take the 25000+5000 as the cost for depn. I know it can be a silly question but one can easily make a mistake during the exam… assuming strat line depn over 5 years.
90% sure you don’t.
you mean take USD 25,000 right?
What? You capitalise the installation costs surely… don’t you?
you include it as depreciation. The cost of the product includes instalation so you can depreciate it… I think
Yea just the 25,000 depreciated is what I am thinking.
I think we depreciate on ‘25000+5000’, don’t we? Good question - never though of such a situation in the hastiness of things
You capitalise the whole lot and depreciate. So install costs/shipping etc go in, although changes in working capital don’t, even if this is included in the initial outlay figure.
That sounds right, thanks chrismaths. Good question wonder2008. Sorry I didn’t look up the answer myself before answering.
there was a question in book 7 that took both cost and installation and depreciated the combined
cool… thanks guys! concept_nailed_counter_today = +1
seriously these small things can make a difference. I might have been a silly question but it can easily be a confusion
That’s what makes this website so useful.
Nib what are your plans for the days up to the exam? I would like to take the cfa exams tomorrow then hopefully the mocks. However i am forgetting alot of stuff!!
This weekend I am going to read some of the material which I haven’t done in a few weeks. Mainly PM, Competitive Strategy, Porter, and Ethics. For now I am just taking exams, writing all the solutions next to each question and then going over what I did right or wrong.