alleryTest cost incurred before commercial production starts is:
ACharged off as revenue
BRecognised as goodwill
CTreated as inventory only
DAdded to cost of PPE
Answer & Solution
Correct answer: D. Added to cost of PPE
1. AS 10 includes test costs to verify asset functions properly within the cost of PPE.
2. Net proceeds from selling test outputs are deducted.
3. They are not revenue charged off in P&L.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §2 cost components (e)_
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