Home › CA Inter › accounting › Property, Plant and Equipment (AS 10) › Under AS 10, which cost is excluded from the cap…
Under AS 10, which cost is excluded from the capitalised cost of a plant precisely because it is not incurred to bring the asset to its working condition for intended use?
AInitial delivery, freight and handling charges incurred
BSite preparation and levelling costs incurred
CInstallation, assembly and testing costs incurred
DInitial operating losses before commercial production
Answer & Solution
Correct answer: D. Initial operating losses before commercial production
1. Delivery, site preparation and installation are all incurred to get the asset ready for use, so they are capitalised.
2. Initial operating losses arise after installation, during the ramp-up of production.
3. They are not costs of bringing the asset to working condition and are therefore excluded and expensed.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 MCQ — Q.9, AS 10 Property, Plant & Equipment._
Related questions
KPK Ltd is installing a new plant: supplier's invoice ₹45,00,000; estimated dismantling coUnder AS 10, the cost of an item of property, plant and equipment comprises its purchase pKPK Ltd is installing a new plant: supplier's invoice ₹45,00,000; estimated dismantling coKPK Ltd is installing a new plant: supplier's invoice ₹45,00,000; estimated dismantling coUnder AS 10, how are initial delivery and handling costs of a newly purchased plant treateUnder AS 10, are professional fees paid to consultants for advice on the acquisition of a KPK Ltd is installing a new plant: supplier's invoice ₹45,00,000; estimated dismantling coUnder AS 10, how is the estimated cost of dismantling and removing an item of PPE (an obli