Residual value is specifically:

The gross cash amount that is received from the ultimate sale of the asset, at the end of
its life
The net cash amount that is received from the ultimate sale of the asset, at the end of
its life
Scrap value

Useful life of an asset refers to the life:

The average of A and B
A: Of the asset throughout its life, in the hands of any number of owners
B: Of the asset whilst it is available for use in the firm

Spare parts and servicing equipment are usually accounted for as:
Expenses written off to the profit or loss on buying
Inventory
A separate class of fixed assets

Individually-insignificant items, such as moulds, tools and dies may

be:
Ignored
Expensed on purchase
Aggregated as one asset

Repairs and maintenance costs are normally:

Expensed in the profit or loss as incurred
Recorded as deferred expenses
Capitalised

If the costs of a major inspection (for example, aircraft) are capitalised:

Any remaining costs of a previous inspection must be written off
They must be shown as a separate asset
The board of directors must be notified immediately
 Elements of cost are:<br><br> (i) The purchase price.<br> (ii) Any
costs directly attributable to bringing the asset to the location.<br> (iii)
The initial estimate of the costs of dismantling, and removing the
item.<br> (iv) Overheads of the purchasing department relating to the
buy of the asset.
(i) to (ii)
(i) only
(i) to (iii)
(i) to (iv)

Directly attributable costs include:<br><br> i. staff costs arising

directly from the construction, or acquisition, of the item of property,
plant and equipment;<br> ii. site preparation costs;<br> iii. initial
delivery and handling costs;<br> iv. costs of testing whether the asset
is functioning properly, after deducting the net proceeds from any
samples, or sundry income; and<br> v. professional fees.<br> vi.
costs of opening a new facility;<br> vii. costs of introducing a new
product, or service (including costs of advertising and promotional
activities);<br> viii. costs of running a business in a new location, or
with a new class of customer (including costs of staff training);
and<br> ix. administration and other general overhead costs.
(i) to (v)
(vi) to (ix)
(i) to (vii)
(i) to (ix)

Recognition of costs (to be capitalised) ceases when:

Full production capacity has been reached
The accounting period ends
The item is in the location and capable of operating

The following costs should be accounted for as:<br><br> (i) costs

incurred while an item, capable of operating in the manner intended by
 management, has yet to be brought into use, or is operated at less
than full capacity;<br> (ii) initial operating losses, such as those
incurred while demand for the item’s output builds up; and<br> (iii)
costs of relocating, or reorganising part, or all, of an undertaking’s
operations.
(Capitalised as) fixed assets
Extraordinary items
Expenses

ncidental income and expenses (such as using a site as a temporary

car park) should be:
Taken to the profit or loss
Capitalised into the asset
Ignored

Internal profits generated, when creating a self-constructed asset,

should be:
Eliminated from the asset cost
Included in the asset’s cost
Depreciated over the life of the asset