How do you treat a purchase of a new component of a fixed asset?

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1192248

2026-04-02 12:25

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As per IAS 16:

If purchase of component of fixed asset is major part of original asset or purchase of component increase the effectiveness or live of asset then it is treated as a part of original price and treated as asset.

If purchase of component is routine purchase for small repair etc then it is treated as revenue expense.

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