Dictionary of Accounting Terms: self-constructed asset
self-constructed asset
entity that makes its own asset (e.g., manufactures the asset rather than buying it from outside). Such an asset is recorded at the incremental costs to build (material, labor, and overhead), assuming idle capacity. Fixed overhead is excluded unless it increases because of the construction effort. However, self-constructed assets should not be recorded at an amount exceeding the outside price.
Example: Incremental costs to self-construct equipment are $40,000. The equipment could be bought from outside at $37,000.
