Q. treatment of income before capitalisation under Ind AS 16

Question

whether export incentive earned on export sale of samples arising out of trial run before capitalization should be reduced from cost of assets similar to the treatment of net sale proceeds of items produced over the cost of testing which is reduced from cost of asset and not charged to profit and loss account as per amendment to Ind AS 16 property, plant and equipment.

Or the export incentive should be charged to profit and loss account separately.

Answer 1

Cost of testing is directly attributable to cost after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition.