Questions & Answers

Change from revaluation back to cost model

Question We intend to change our accounting policy on land and building from “Revaluation model” to “Cost model”. IAS 16 is silent on that. Please, what are your thoughts on this? Answer It is not prohibited, but it is very rare. I would say…

Expenses for remediation of environmental damage

Question We operate a chiller plant through which we provide cooling services to our customers. However the soil around the plant is of poor quality due to a leakage of water from the plant. It caused some underground leaks. We are able to identify the…

Testing goods: inventories, expense or PPE?

Question I work with an antivirus software company in the cybersecurity industry. 95% of our sales are software but we also sell some hardware products. For the hardware products, we use some units as “proof of concept” stock; our Sales Engineers ship to our customers…

Annual license fees on software

Question We have bought SAP system for accounting from a vendor and we need to pay annual license fees to maintain this software. Kindly advise whether we can capitalise annual license fees? Answer If it is a software that is not necessary for the…

Impairment and subsequent depreciation

Question We recognized impairment loss on one of our buildings because its fair value was by CU 40 000 lower than its carrying amount. We depreciated that building on a straight-line basis over 40 years. How should we continue depreciating the building after recognition of…