Question 6.8: A building, with a cost of 22 mil. lei, is depreciated over ...

Financial Accounting An IFRS Perspective in Romania

A building, with a cost of 22 mil. lei, is depreciated over 20 years via the straight-line method (a residual value of 2 mil. lei is estimated). The following events occur :

(a) during the 3rd year of use its internal walls are repainted, the overall cost is 80,000 lei (no VAT added)
(b) on December 31st, 20X9, a general repair and full renovation project ended, the overall cost of it being 1.19 million lei (VAT of 19% included).

Requirements: Which subsequent costs should be capitalised and what effect would this have on the annual financial statements?

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