Should Training Be Capitalized?

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.

Is training cost a capital expenditure?

So, how should W4H account for the training costs? The short answer, they should be expensed as incurred. You might have wondered if the costs should be capitalized, possibly as a contract asset under IFRS 15. Or even as an intangible asset under IAS 38.

Is employee training cost an asset?

Training cost is incurred to enhance the capability of the human resources which would be expected to bring future economic benefits to the entity. Having said that, to recognise an asset, an entity must have control over the resources. This is where training cost falls short in meeting the definition of an asset.