Cost of an Asset

[Ahmed Raza]

Dear All

My question is about computing the cost of an asset. If a company ask its employees to contribute at the time of purchase, what will be the cost element appearing in the books of the company. For example

Cost of a vehicle to be given to department head 1,200,000
Contribution by the company 1,000,000
Contribution required from department head 200,000

In my opinion, the company should recognise only 1 million i.e. net off the employee contribution with the cost, whereas, a colleague of mine is of the view that this amount should be recognised as a deferred liability and should be amortized against additional depreciation over the useful life of the asset ( just like we do it for Govt. Grants).

Please, refer some text from IAS or IFRS to reach to a conclusion.

 

[Ahmed Raza]

We have discussed another way to do it i.e. to recognise assets at 1.2 million and record the loan amount as liability. However, the asset will be depreciated for cost less (residual value plus this loan amount) and at the end of asset's life when it will be disposed off the amount of loan should be adjusted.