Capitalisation of staff costs IAS16

Didn't find your answer?

Can anyone point me to usefulguidance or case studies on the capitalisation of staff costs? IAS16 says 'directly attributable costs' during the construction or acquisition of an item of PPE can be capitalised. In my eyes this is pretty vague and some case studies would be useful to see this put in practice. I have had a search on Mercia and Croner-I for examples and I am finding them hard to come by

Replies (1)

Please login or register to join the discussion.

By paul.benny
02nd Feb 2023 17:30

I can't point you to formal guidance on this. My rule of thumb is to capitalise only incremental costs - eg project manager hired for the purpose. If staff have been seconded to project, then the cost of any back-fill staff. Same principle applies if you have to hire in equipment for the project.

What's the context? If you're a multi-site business with a team who manage and carry out fit-outs, there's a fair case for including recovery of their costs against each new property. In practice they probably also manage maintenance, so you might have to find a way of apportioning their costs.

In all of this, I would only be capitalising direct costs - payroll and on-costs. I would not be including a 'rent' on the space the people occupy

Thanks (0)