Page 199 - BA2 Integrated Workbook - Student 2017
P. 199
Short-term decision making
1.3 Relevant cost of non-current assets
The relevant costs associated with non-current assets, such as plant and machinery,
are determined in a similar way to the relevant costs of materials.
Will asset be Yes
replaced? Replacement cost
No
No Net cash flows from
the use of the asset
Will asset be sold?
Yes
Net realisable value
Where there is a choice between selling an asset, or using the asset, the higher of
the net realisable value and the cash flows from the use of the asset (the economic
value) should be selected as the relevant cost.
TYU 5
191
