Overhauling the fully depreciated Assets

[Wgad]

I would like to inquire about the capitalization of overhauling cost that performed over a fully depreciation assets,

I found one of my audited clients has capitalized the overhauling expenses that performed over fully depreciated assets; however, this cost is just to keep the assets in its normal work condition and doesn't increase its production capacity.

So, I need IFRS support either to confirm or deny this accounting treatment.

[Marek Muc]

There are two distinct questions here:
1. Is this expenditure eligible to be included in the carrying amount of the associated asset?
2. Assuming it is, should the entity reassess the asset's remaining useful life?

If the response to the first question is 'no', the expenditure is instantly recognised in P/L. Could you provide more details on the specifics of these expenditures and the associated assets?

[Wgad]

the assets are fully depreciated, so the carrying amount is zero and since the assets is fully depreciated there is no remaining useful life.

this cost is a maintenance cost or kind of overhauling cost charged over a specific component at fertilizers factory to keep this component in the normal work condition, this cost is incurred every five years, so the company capitalize it and depreciate it over five years.

the dilemma here, because of the fixed assets are fully depreciated, so there is no original carrying cost and no useful life

[Marek Muc]

https://ifrscommunity.com/knowledge-bas ... -overhauls

When assets are fully depreciated, their carrying value and remaining useful life both drop to zero. But significant events like major inspections or overhauls warrant a re-evaluation of the asset's remaining useful life. This re-evaluation will lead to depreciating the cost of the overhaul https://ifrscommunity.com/knowledge-bas ... -estimates

[Wgad]

Many thanks Marek, Appreciated a lot