Asked by Cianna Rodriguez on May 29, 2024
Verified
Under IFRS, which of the following must be expensed?
A) maintenance only
B) repairs only
C) rearrangements only
D) maintenance, repairs, and rearrangements
IFRS
A set of accounting standards named International Financial Reporting Standards, developed globally by the International Accounting Standards Board (IASB).
Expensed
Refers to the accounting practice of recognizing a cost as an expense in the income statement in the period it is incurred.
Maintenance
The process of preserving a condition or situation or the process of keeping something in working order by regularly servicing it.
- Analyze the criteria for capitalizing versus expensing expenditures related to property, plant, and equipment.
Verified Answer
AA
Anupam AbhayMay 30, 2024
Final Answer :
D
Explanation :
Under IFRS, maintenance, repairs, and rearrangements must be expensed as they are considered to be routine or ongoing expenses for the maintenance of the asset's operating condition. However, if the asset is improved or its useful life is extended, then the cost of such improvements or extensions should be capitalized and amortized over the asset's remaining useful life.
Learning Objectives
- Analyze the criteria for capitalizing versus expensing expenditures related to property, plant, and equipment.