Hello
I was wondering when depreciation expense should be recognized when it's embedded in COGS (under IFRS). For instance, let's say that I started manufacturing widgets with equipment (that is fully dedicated to manufacturing these widgets) on Jan 1 of this year. Typically, depreciation of the asset would begin on Jan 1, but I'm not sure that's the case when the equipment is dedicated to something that is capitalized as inventory. However, if I don't sell anything from the equipment until July 1, do I not recognize any depreciation on the fixed assets (i.e., reducing the carrying amount on the balance sheet) until July 1? Or do I start recognizing depreciation immediately from Jan 1?
Thanks
Rob
I was wondering when depreciation expense should be recognized when it's embedded in COGS (under IFRS). For instance, let's say that I started manufacturing widgets with equipment (that is fully dedicated to manufacturing these widgets) on Jan 1 of this year. Typically, depreciation of the asset would begin on Jan 1, but I'm not sure that's the case when the equipment is dedicated to something that is capitalized as inventory. However, if I don't sell anything from the equipment until July 1, do I not recognize any depreciation on the fixed assets (i.e., reducing the carrying amount on the balance sheet) until July 1? Or do I start recognizing depreciation immediately from Jan 1?
Thanks
Rob