Question

Question 1 Not yet answered Indirect costs, such as building design or project cost accountants or legal fees may be capitalized if you can prove they are related to the project. Points out of 1.00 Select one: O True P Flag question O False Question 2 Where do capitalized costs show on a company's financial statements? (such as Balance Sheet, Income Statement, Statement of Cash Flows or Statement of Shareholders' equity) Not yet answered Points out of 2.00 Answer: P Flag question

Answer 1

Q1 : True

Reason - Any cost which is incurred to bring the asset (in this case, the project to present location and condition i.e., ready for use) can be capitalized. This is clarified as per IAS 16. Thus in the given case building design or project cost accountants or legal fees can be capitalized to the projects value in case its proved they are directly related to the project.

Q2: Capitalized costs are shown on the assets side of the balance sheet in the company's financial statements.