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Non-current assets: acquisition and depreciation

Tangible non-current assets

3.1 Acquisition of a tangible non-current asset

According to IAS 16, Property, Plant and Equipment, the cost of a non-current asset
is any amount incurred to acquire the asset and bring it into working condition.

Includes Excludes
capital expenditure such as: revenue expenditure such as:

 purchase cost  repairs and maintenance

 delivery costs  repainting

 legal fees  administration

 subsequent expenditure  subsequent expenditure
that enhances the that maintains the
productive capacity of an productive capacity of an
asset asset

 trial, testing and installation  general overheads
costs.  wastage

 training costs.

The correct double-entry to record the purchase is:

Debit Non-current asset account

Credit Cash/bank/payable account

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