AASB 102 Inventories requires items of inventories that are used by a business as components in a self-constructed property asset to be:
A) added to a 'property construction' provision account.
B) capitalised and depreciated.
C) expensed directly into equity in the period in which the items are used.
D) aggregated into 'cost of goods sold' in the period in which the items are used.

Question

Quizplus · Accepted Answer

AASB 102 requires component parts of an item of inventory that are used in a self-constructed property asset to be capitalized and depreciated as part of the cost of that asset. This treatment reflects the fact that the components are being used to create a long-term asset rather than being consumed in the production of inventory that will be sold in the short term. Therefore, choice B is the correct option.

AASB 102 Inventories Requires Items of Inventories That Are Used