Capitalise installation fees


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Jul 19, 2020
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United Arab Emirates
Hi All,



I am working for a telecom operator and we would like to assess the possibility to capitalise fiber internet installation services.



What is the customer has signed the contract to buy an Internet service we send a technician who takes the items from the inventory to install the modem on the customers premise which is then connected to a termination box outside of the customers house. The termination box is owned by us and already exists when the technician arrives.



This device is owned by us and the modem devices is then owned by the customer and expenses along with the services installation fees.



The question now is whether we can capitalise the installation Service fees.



Would a capitalization of the installation fee be possible under the existing device (IAS16) as it extends the revenue generation?



If the the contract costs are recorded as a cost to fulfill under IFRS 15 and subsequently amortised…would it be recorded as an depreciation and amortisation under the EBITDA or as CogS/ CoS?
 
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