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Does CAPEX includes Pre-Operational expenses and why ?

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Question ajoutée par CA Hussain Yusufali Bootwala , FINANCE MANAGER , JEEPERS AUTO MECHANICAL
Date de publication: 2015/12/28
Abed Alrazzak Samara
par Abed Alrazzak Samara , Regional Financial Analyst , Philip Morris International

Hi,

 

It depends on the type of activity, in general amounts to be capitalized are all costs necessary to bring the asset to the condition and location necessary for its intended use. so if pre-operational expenses where directly related to a new machine for example which is essential to the operational process, then the amounts should be capitalized.

 

The question is a little vague as pre-operational expenses are not well defined. however I hope what I have mentioned above will give a clear understanding of the general treatment for CAPEX.

 

Thanks

Abed

 

 

 

 

 

 

 

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