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IFRS 1 — Accounting for costs included in self-constructed assets on transition

Date recorded:

The IFRIC continued its discussion related to this issue from the January 2010 IFRIC meeting. Staff research found that the issue was not very common in practice.

The IFRIC briefly discussed the possibility of capitalisation of costs that were recorded in other comprehensive income (OCI). Based on preliminary analysis most of the IFRIC members agreed that accounting policies related to recognising the item in profit or loss or in OCI should not drive the decision whether to capitalise. Nonetheless, most of the IFRIC members thought that other practical difficulties would prevent entities from capitalisation of items recognised in OCI.

One IFRIC member noted that the issue is more prevalent in North America in relation to pension cost and expressed his preference for a more explicit guidance. Nonetheless, he acknowledged that the issue was more complex, as pension costs are capitalised in their entirety and not by components. Other IFRIC members noted, that materiality of the issue should also be considered.

Finally, the IFRIC decided not to add the issue to its agenda as it did not expect widespread divergence in the practice.

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