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Decommissioning
Accountancy
Decommissioning cost is capitalised for PPE which is used for purposes other than to produce inventory. E.g. AC Is it capitalised for machinery which produces inventory? If not, what is the accounting treatment for that? Pls explain
Answers (5)
Its not capitalised for the machinery used for inventory production. Such expenses are treated as per AS 2 Para 19 of AS 10 clarifies "An enterprise applies AS 2, Valuation of Inventories, to the costs of obligations for dismantling, removing and restoring the site on which an item is located that are incurred during a particular period as a consequence of having used the item to produce inventories during that period."
