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Under AS 10, how are initial operating losses incurred before a plant reaches planned performance treated?
ACapitalised as part of the plant's cost
BCharged to the Statement of Profit and Loss
CDeferred and amortised over the plant's life
DAdjusted against the supplier's invoice
Answer & Solution
Correct answer: B. Charged to the Statement of Profit and Loss
1. AS 10 capitalises only costs needed to bring the asset to its working condition for intended use.
2. Initial operating losses before planned performance are not such costs.
3. They are therefore recognised as an expense in the Statement of Profit and Loss.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 MCQ — Q.9, AS 10 Property, Plant & Equipment._
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