The answer is yes, we can capitalize the training cost if we can justify that it is the necessary cost need to bring assets to working condition. Without this training cost, the asset will not be to work as it should be. However, it is not easy to prove that the training cost is necessary to bring assets to use.

When can training costs be Capitalised?

Training costs are not able to be capitalised as entities do not usually have sufficient control over the expected future economic benefits arising from training staff. Similarly, indirect expenditure may be incurred without acquiring or creating an asset that can be recognised under AASB 138 Intangible Assets.

Can you amortize training?

Amortized items usually consist of intangible assets such as training expenses that contribute to the earnings potential of a company. A cost can only be amortized if you sustain or pay it before your first day of business or, if your company has started operations, the IRS has deemed it a qualified business expense.