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If spare parts and servicing equipment can be used only in connection with an item of PPE, they are accounted for as PPE. True or False?

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Question ajoutée par Toyin Adun-FCA-MBA-Finance-CMA , Finance Manager , Emirates Business Group
Date de publication: 2015/11/17
Mark Angelo Damuag
par Mark Angelo Damuag , Financial Analyst , Evacare Management Consultancy Inc

It depends.. if cost of the spare parts and servicing equipment is not material with that item of PPE, that could be charged as outright expense. However, if the cost is material, then there are two approach that can be followed: first is to depreciate that spare parts together with the remaining life of that item in PPE provided that spare parts are expected to have a life that are the same or greater than of the remaining life of the item in PPE. Last is to depreciate the said spare parts separately from the item of PPE if its useful life is expected to be shorter than the item in PPE. thanks.. =)

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