Construction Contracts

hira.ghaffar · 10-05-2010, 02:20 AM

If a machine is bought specifically for the purpose of the contract. what would be done with its price and the related depreciation charges.
urgent reply needed
have exam

ciapk · 10-05-2010, 03:53 PM

Dear Hira,

Any asset specifically purchased for the contract and having no other use after the completion of project will be depreciated during the construction period of the project and charged as a cost directly relating to the project in accordance with Paragraph 17 of the IAS 11 in case of fixed price contracts and if such cost is agreed to be included as per term of agreement with the counter party, in case of cost plus contracts.

Regards,