John Holtz C Essay

David Holtz C

Joan Holtz (C)

c a s eВ В В В r e g o r t


Prepared by

MBAxii G7

Mohamad Nizam Jaafar

Farithal N Sahari

Mizwan Mohamad Shahimin

Mohaini Ahmad Basri

Published to

Doctor Nik Nazli Nik Ahmad


18thВ August 2002



| Subjective of the case| В | В | 3

| В | В | В | В


| Scenario 1: On self-constructed building| В | В | 4| В | Scenario 2: About purchase area and building| В | В | 6| В | Scenario 3: On acquiring a new machine| В | В | 8| В | Scenario four: On leased assets| В | В | 10

| Situation 5: In Income Tax Credit| В | В | 13

| Scenario six: On Changing an Equipment| В | В | 14| В | В | В | В | В

| Queries & Answers| В | В | 16

| В | В | В | В

| Conclusion| В | В | 19

| В | В | В | В

| Bout: | В | В | 20

| В | В | В | В

1| Further Information upon Lease| В | В | my spouse and i

2| Further Information on Exploration & Development Costs| В | В | ii| 3| More information on Bag Purchase| В | В | iii| 4| Backup of First Case Question| В | В | iv

5| Copy of Oral Display Handouts| В | В | v

6| Backup of Common Presentation Slides| В | В | vi

| В | В | В | В

| Main References| В | В | twenty three


To be or perhaps not to be…that's the question.

To capitalize or expense, that's the main theme of the case. В

Joan asked her mentor on how to decide which expenditure is to be made a fortune, and which usually to be expensed. She asked several scenarios to her teacher. В

Fundamentally, for each scenario given, increased of costs determined depending on: В

1 . В В В В В В Necessity

installment payments on your В В В В В В Future benefits

Nevertheless, issues arise in certain at some situations, such that costs associated with procurment, taxes and R& M. In those cases, a lot of factors or perhaps criteria defined per accounting guidelines as well as standards should be referred. В

However , that to be recognized that all capitalized expenditure will over period is allocated over time in respect to it is usage. This sort of allocation will be in term of: В

depreciation (for tangibles),

demise (for intangibles),

or exhaustion (for organic resources).


Short Information

Bruce Manufacturing CompanyВ used its own repair crew to generate additional side to their existing factory and received the followings: В

         Architect fee

         Cost of eliminating snow intended for clearing structure site          Cash discount in construction materials purchased          Cost of development office & tool shed that to be torn down once structure completed          Local real estate income taxes

         Interest upon money borrowed to finance the construction          Cost of blunders during development

         Overhead expense of the maintenance division          Cost of insurance during construction

         Cost of losses/injuries not have the insurance В

Argument For Discussion

Which in turn of the costs are to be made a fortune?

Solution & Analysis

Based on the general guide in IAS 16 (Property, Plant & Equipment), the cost of a do it yourself constructed assetВ В " should contain those costs which associate directly to the particular asset and those that are attributable to the construction activity in general and can be allocated to the particular asset. ” В


You Fee| Capitalized| These are almost all ‘one-time costs' incurred in making the place ready for construction therefore, to be capitalized.  |  Snow clearance|  Capitalized|

Cash discount| В Capitalized|

Structure office| В Capitalized|

Real estate property taxes| В Capitalized|

Curiosity on funds borrowed to finance the construction| В В CapitalizedВ | В В According to MASB 27(Borrowing...