IAS 16 - Initial Recognition

Employee Benefits capitalisation to a construction scheme.

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I want to understand an employee benefits capitalisation to a construction scheme. How would you treat general management (Director) bonus when capitalising an employee benefit cost (salary, NI, pension) to a construction scheme. Is it prudent to assume Director bonus as a direct attributable cost to a construction scheme, if a Director has spent 50% of time on achieving a planning?

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Nikhil

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By paul.benny
31st May 2019 09:29

What evidence do you have to support the 50% of time? And to what extent is the bonus award related to that work?

Indirect salaries are a recurring cost that continues whether or not the business has capital projects. I'm generally reluctant to capitalise recurring costs because that flatters P&L and gives a potentially misleading view of underlying profitability.

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