Acquisition

In this lesson

1. 0:00 Tangible non-current assets overview
2. 0:23 Defining non-current assets and classification
3. 1:18 Non-current versus current assets
4. 2:03 Capital versus revenue expenditure
5. 3:39 Maintaining versus improving earning capacity
6. 4:53 IS 16 guidance on initial measurement
7. 5:52 Capitalising initial acquisition costs
8. 7:28 Capitalising subsequent expenditure
9. 8:33 Capital and revenue expenditure summary
10. 9:04 Worked example: Machine purchase classification
11. 11:56 Journal entries and tax treatment

About this lesson

You'll discover the key distinction between capital expenditure (which goes on the Statement of Financial Position) and revenue expenditure (which goes straight to the Statement of Profit or Loss), and understand why this matters under the accruals concept. The session covers the practical application of IAS 16 Property, Plant and Equipment, showing you exactly which costs can be capitalised when you first acquire an asset. Beyond the purchase price, this includes delivery, installation, site preparation, and professional fees—essentially any cost needed to bring the asset to the location and condition where it can be used. You'll also learn when subsequent expenditure after acquisition can be capitalised, such as improvements, component replacements, or major inspections. Through a worked example, you'll see how to separate capitalisable costs from those that must be expensed immediately, such as training, routine maintenance, and recoverable sales tax. This practical approach ensures you can confidently classify costs correctly in real exam scenarios and understand the accounting treatment that follows.

Duration: 12m