PRC-1 · Chapter 6 · Question 77 of 100
Alpha Trading Limited used its own staff and paid wages for their time spent constructing a new warehouse for the business. How should these staff wages be accounted for?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) They must be capitalized as part of the cost of the new warehouse.
Explanation
Directly attributable costs of constructing a self-constructed asset, including the wages of employees directly involved in the construction process, must be capitalized as part of the asset's cost.
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