IAS 16 PROPERTY PLANT AND EQUIPMENT EXTRACTS

IAS 16
Initial Recognition
1. Initial recognition at cost (15)
a. Cost(Def) Cash/fair value of the consideration given
b. Elements of cost (16 20)
i. Purchase price
1. Import duties
2. Non-refundable directly attributable taxes
ii. All cost to bring the asset into usable conditions as intended by
management
1. Employee costs
2. Delivery costs
3. Installation and assembly costs
4. Testing costs
5. Legal/Professional costs
iii. Committed Dismantling costs (IAS 37 Ref)
c. Cost Measurement
i. Payment is deferred beyond normal credit terms discounted
price (23)
ii. Exchange (24)
1. Exchange has commercial substance
a. FV of the asset given up can be measured Record
at FV of asset given up
b. FV of asset given up cannot be measured Record
at FV of asset obtained
c. FV of both assets are not available Record at CV
of asset given up
2. Exchange does not have commercial substance Record
at CV of asset given up
Subsequent Recognition
1. Cost Model (29 30) Cost less accumulated depreciation
2. Revaluation Model (31) FV at revaluation date less subsequent accumulated
depreciation
a. Revaluation Increase (39)
Dr

Asset

XX

Cr

OCI

XX

Dr

OCI

XX

Cr

Revaluation Surplus

XX

b. Revaluation Decrease (40)

IAS 16

BILAL ZIA

IAS 16 PROPERTY PLANT AND EQUIPMENT EXTRACTS

Dr

Income Statement

XX

Cr

Asset (NBV)

XX

3. Depreciation (43 54, 59 62) all variable checked annually

a. Depreciable amount
i. Residual value (51) (Def)
b. Depreciation Period
i. Useful life vs Economic life (57) (Def)
c. Depreciation Method Reflect the pattern of consumption
i. Straight line method
ii. Reducing balance method
iii. Number of production units
4. Impairment (63 65) (Def) Recoverable amount (RA) < Carrying value
a. RA = higher (FVLCTS vs VIU) (IAS 36)
De-recognition (67 72)
5. Gain/loss (Net sale proceeds CV) recognized in Income statement
6. Transfer Revaluation surplus to Retained Earnings

IAS 16

BILAL ZIA