IAS 16- Property, Plant and Equipment

The cold of IAS 16 is to appoint the accounting analysis for property, plant,

And accessories (PP&E) so that users of the banking statements can discern

Information about the entity’s investment in its PP&E and any changes in those

Investments.

The arch issues associated with accounting for PP&E are

• Acceptance of the assets if they are acquired

• Assurance of the accustomed amounts of these assets in consecutive periods

• Assurance of abrasion accuse and any crime losses to be recognized

RECOGNITION

Ø  Items of Property, Plant and accessories should be accustomed as assets when:

Ø  It is apparent that the approaching bread-and-butter allowances associated to the asset will breeze to the entity.

Ø  Expected ton be acclimated during added than one accounting period.

Ø  This acceptance arch is activated to all PPE costs at the time if they are incurred. The costs include:

Ø  The bulk of acquirement additional any barter discount, import duties and non-refundable sales taxes.

Ø  The bulk anon incurred in bringing the asset to the area and action to operate.

Ø  The anon attributable costs like agent allowances payable to staff, site preparation, and professional fees anon associated with the installing, constructing or initially testing the asset...

Ø  Any added absolute bulk associated with the installation, construction or antecedent testing of the asset.

Ø  The anon for which the costs can be included in the bulk of PPE ends if the asset is accessible for use.

Ø  The bulk of asset will as well cover the bulk on

Ø  Dismantling and removing the account and abating the website on which it was located. The present bulk of such costs would be capitalized.

INITIAL MEASUREMENT

An account of property, bulb and accessories should initially be recorded at cost. Cost includes all absolute costs incurred on installation, construction or antecedent testing of the asset, plus all anon attributable costs explained above.

Cost model

Afterwards acceptance as an asset, an account of property, bulb and equipment

Shall be agitated at its bulk beneath any accumulated abrasion and any accumulated

Impairment losses.

Revaluation Mode:

After acceptance as an asset, an account of property, bulb and

Equipment whose fair bulk can be abstinent anxiously shall be agitated at a revalued

Amount, getting its fair bulk at the date of the revaluation beneath any subsequent

Accumulated abrasion and consecutive accumulated crime losses.

Revaluations shall be fabricated with acceptable regularity to ensure that the carrying

Amount does not alter materially from that which would be bent application fair

Value at the antithesis area date.

If an asset’s accustomed bulk is added as a aftereffect of a revaluation, the increase

Shall be accustomed anon to disinterestedness beneath the branch of revaluation surplus.

Depreciation

Depreciation is the analytical allocation of the depreciable bulk of an asset over its

Useful life. Depreciable bulk is the bulk of an asset, or added bulk commissioned for

Cost, beneath its antithesis value. Anniversary allotment of an account of property, bulb and equipment

With a bulk that is cogent in affiliation to the absolute bulk of the account shall be

Depreciated separately. The abrasion allegation for anniversary anon shall be recognized in

Profit or accident unless it is included in the accustomed bulk of addition asset.

The abrasion adjustment acclimated shall reflect the arrangement in which the asset’s future

Economic allowances are accepted to be captivated by the entity.

METHODS OF DEPRECIATION

The lot of accepted methods to admeasure abrasion is:

Straight Line Method

DEPRECIATION = COST - RESIDUAL VALUE / USEFUL LIFE

Diminishing Antithesis Method

Depreciation is affected on the crumbling antithesis in this method.

SCOPE:-

The Standard clarifies that some types of inventories are alfresco its ambit while assertive added types of inventories are exempted alone from the altitude requirements in the Standard.

Some of the ambit is as follows:-

1. Raw actual (material in use)

2. Plan in action (work getting in process)

3. Accomplished appurtenances (goods which are able for using)

The Standard does not administer to the altitude of inventories of producers of agronomical and backwoods products, agronomical aftermath afterwards harvest, and minerals and mineral products, to the admeasurements that they are abstinent at net accessible bulk in accordance with absolute industry practices. The antecedent adaptation of IAS 2 was adapted to alter the words 'mineral ores' with 'minerals and mineral products' to analyze that the ambit absolution is not bound to the aboriginal date of abstraction of mineral ores.

DISCLOSURE:-

Accounting action for inventories. Accustomed amount about classified as merchandise, supplies, materials, plan in action and accomplished goods· g amount, about classified as merchandise, supplies, materials, plan in action and accomplished goods. The allocation depends on what is adapted for entity…

Carrying bulk of any inventories at fair bulk beneath bulk to sell

Amount of any change about of a address down to NRV and the affairs that led to such reversal

Amount of any write-down of inventories accustomed as an bulk in the period

Accustomed bulk of inventories apprenticed as aegis for liabilities

Cost of inventories accustomed as bulk (cost of appurtenances sold). IAS 2 acknowledges that some enterprises allocate assets account costs by attributes (material, activity and so on) rather than by functions (CGS affairs bulk and so on). Accordingly, as an another to advice bulk of appurtenances awash expense, IAS 2 allows an article to acknowledge operating costs recognized during the anon by attributes of the bulk (raw abstracts and consumables, labor costs, added operating costs) and the bulk of the net change in inventories for the period).