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Non-current assets: Acquisition and depreciation

Tangible non-current assets

3.1 Acquisition of a tangible non-current asset

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

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

 purchase price  repairs and maintenance

 delivery costs  repainting

 legal fees  administration

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

 trial, testing and installation costs.  general overheads

 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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