(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009(c)(d)(e)costs of conducting business in a new location or with a new class ofcustomer (including costs of staff training).administration and other general overhead costs.borrowing costs (see Section 25 Borrowing Costs).17.12 The income and related expenses of incidental operations during construction ordevelopment of an item of property, plant and equipment are recognised in profitor loss if those operations are not necessary to bring the item to its intendedlocation and operating condition.Measurement of cost17.13 The cost of an item of property, plant and equipment is the cash price equivalentat the recognition date. If payment is deferred beyond normal credit terms, thecost is the present value of all future payments.Exchanges of assets17.14 An item of property, plant or equipment may be acquired in exchange for anon-monetary asset or assets, or a combination of monetary and non-monetaryassets. An entity shall measure the cost of the acquired asset at fair value unless(a) the exchange transaction lacks commercial substance or (b) the fair value ofneither the asset received nor the asset given up is reliably measurable. In thatcase, the asset’s cost is measured at the carrying amount of the asset given up.Measurement after initial recognition17.15 An entity shall measure all items of property, plant and equipment after initialrecognition at cost less any accumulated depreciation and any accumulatedimpairment losses. An entity shall recognise the costs of day-to-day servicing ofan item of property, plant and equipment in profit or loss in the period in whichthe costs are incurred.Depreciation17.16 If the major components of an item of property, plant and equipment havesignificantly different patterns of consumption of economic benefits, an entityshall allocate the initial cost of the asset to its major components and depreciateeach such component separately over its useful life. Other assets shall bedepreciated over their useful lives as a single asset. With some exceptions, suchas quarries and sites used for landfill, land has an unlimited useful life andtherefore is not depreciated.17.17 The depreciation charge for each period shall be recognised in profit or loss unlessanother section of this IFRS requires the cost to be recognised as part of the costof an asset. For example, the depreciation of manufacturing property, plant andequipment is included in the costs of inventories (see Section 13 Inventories).94 © IASCF