Hello,
Some machines required the use of cards to work. Without the card, the machine cannot work, it is key component of the machine.
When a card is broken, we replace the card by a new one and we repair the broken one that will be used in another machine.
Those cards meet our capital threshold and have an expected useful life greater than one year.
Shall we capitalize the cards that we purchased to have them available when needed? Intuitively I would say yes, but is not clear to me when yes and when no.
Any paragraph in the IAS16 I can refer to?
Thanks!
IAS 16 - Key component of equipment used to replace a broken one
Re: IAS 16 - Key component of equipment used to replace a broken one
I'd see them as spare parts capitalized as PP&E in accordance with IAS 16.8.
Btw, are they some paper or plastic cards like credit cards or some devices like network cards? How can a card be a critical component of a machine?
Btw, are they some paper or plastic cards like credit cards or some devices like network cards? How can a card be a critical component of a machine?