A company has incurred an enormous costs building machinery to handle its new product lines but did not put it down as an expense in its books.

a. To what extent does this statement reflect the definition of an asset under the Conceptual Framework

b. What extra information in AASB116 is crucial in deciding which costs of the building machinery should be capitalised and which should be expensed?

c. What does this ‘error’ illustrate about the application of accounting standards ( disagreement between Conceptual Framework and AASB 116 Standard).