Educational material on ind as 16 property, plant and equipment. Summary of main changes ipsas 17 property, plant and. There are essentially four key areas when accounting for property, plant and equipment that you must ensure that you are familiar with. Ias 16 property, plant and equipment sets out the requirements for the recognition of the assets, the determination of their carrying amounts, and the depreciation charges and impairment losses in relation to them. Disposal and write off of property, plant and equipment 10. Property, plant and equipment ind as 16 property, plant and. Acquisition and disposition of property, plant, and equipment. The accounting for ias 16, property, plant and equipment is a particularly important area of the paper f7 syllabus. Icai the institute of chartered accountants of india. Systems, jahangirnagar university, savar, slideshare uses cookies to improve functionality and performance, and to. Property, plant and equipment comprises tangible assets held by an entity for use in the production or supply of goods or services, for rental to others or for administrative purposes, that are expected to be used for more than one period. Procedure for property, plant and equipment management.
Derecognition of property, plant, and equipment open. Property, plant and equipment are tangible items that. Overview ias 16 property, plant and equipment outlines the accounting treatment for most types of property, plant and equipment. International accounting standard 16 property, plant and. This year consolidated cost revaluation 1 jan 07 accumulated depreciation and impairment charges 1 jan 07 carrying amount 1 jan 07 current year additions. However, there are difficulties of obtaining a market value for plant and equipment that are recognised in ias 16. Property, plant and equipment income statement disclosures text disclosure of property, plant and equipment income statement elements which may include depreciation, depletion and amortization expense and gains and losses on disposition of long lived assets used in the production of revenue. Ias 16 ind as brings in a more stringent requirement to maintain component details of fixed assets, in terms of its component approach. Property, plant and equipment ind as 16 property, plant. Ias 16 property, plant and equipment ifrsbox making ifrs easy.
In1 hong kong accounting standard 16 property, plant and equipment hkas 16 should be applied for annual periods beginning on or after 1 january 2005. Accounting for property, plant and equipment acca global. Module 17 property, plant and equipment focus ifrs. Property plant and equipment discounting depreciation. Ifrs has a onestep approach for determining impairment of fixed assets while us gaap has a twostep approach. In case of merger of five public entities into one entity through the passing of a regulation, how should be ppe of the merged organisation be accounted for in the. Dec 02, 2012 accounting for property, plant and equipment fixed assets various accounts and related and items included, related directly to acquisition construction of plant and equipment,bringing it to. Acquisition, valuation and disposition of property, plant, and equipment intermediate accounting 2. The international accounting standards board iasb has published an exposure draft property, plant and equipment proceeds before intended use proposed amendments to ias 16 on proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management. Valuation at depreciated replacement cost is allowed when there is no real market value, because of the specialised nature of the assets. Measurement after recognition definition tangible assets that are held for use in production or supply of goods or services, for rental to others, or for administrative purposes, and are expected to be used for more than one year.
With most of what is examinable feeding though from paper f3 this should be a comfortable topic that you can tackle well in the exam. Risks associated with property, plant and equipment inherent risks 10. Academic resource center property, plant, and equipment page 6 progress on convergence the fasb and iasb are working a joint project which focuses on impairment of financial assets. Ifrs allows reversal of impairment losses on fixed assets, while this is prohibited. Ifrs page 1 of 16 ehab abdou 97672930 introduction. Staff have relocated the paragraph under the title of ipsas 17 to this separate page and reflected the decision made on equal authority.
The objective of ias 16 is to prescribe the accounting treatment for property, plant and. Accounting for property, plant and equipment fixed assets various accounts and related and items included, related directly to acquisition construction of plant and equipment,bringing it to. This indian accounting standard includes paragraphs set in bold type and plain type. Systems, jahangirnagar university, savar, slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Property, plant, and equipment is derecognized when it is sold or when no future economic benefit is expected.
Chapter 10, accounting for property, plant and equipment. The auditor needs to obtain an understanding of the client and its environment to consider inherent risk, including fraud risks, related to property, plant, and equipment. Ias 16 is applied in accounting for property, plant and equipment. Accounting for property, plant, and equipment federal. Property, plant and equipment ppe the cost of an item of ppe will now be the cash price equivalent at the recognition date. What is the definition of property, plant, and equipment. Oct 19, 2016 in summary, it can be seen that accounting for property, plant and equipment is an important topic that features regularly in the paper f7 exam. Ias 16 property, plant and equipment requires that where there has been a permanent diminution in the value of property, plant and equipment, the carrying amount should be written down to the recoverable amount. Tutorial ias 16 property plant and equipment requires that. Ias 16 property, plant and equipment ifrs standards. Amendments to frs 16 property, plant and equipment and frs 41 agriculture. Ordinarily companies account for the exchange of nonmonetary assets by recognizing immediately any gains or losses on the exchange, using the fair value of the asset given up or the fair value of the asset received, whichever is clearly more evident.
The cost and any related accumulated depreciation are removed from the accounting records. International accounting standard 16 property, plant and equipment ias 16 replaces ias 16 property, plant and equipment revised in 1998, and should be applied for annual periods beginning on or after 1 january 2005. Elements of cost 16 the cost of an item of property, plant and equipment comprises. The same rule for revaluation of property applies to plant and equipment. Ias 16 property, plant and equipment a closer look munich. Property, plant, and equipment is defined as tangible assets that are held for use in production or supply of goods. Lease rights of property, plant and equipment do not meet the above definitions, and therefore must be accounted for in accordance with ias 17 leases. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the. Indian accounting standard ind as 16 property, plant and equipment contents objective 1 scope 25 definitions 6 recognition 714 initial costs 11 subsequent costs 1214 measurement at recognition 1528 elements of cost 1622 measurement of cost 2328 measurement after recognition 2966 cost model 30 revaluation model 3142. Longterm assets can be broken down into several categories.
Acquisition and disposition of property, plant, and. The objective of the standard is to prescribe the accounting treatment for property, plant and equipment ppe so that users of financial statements can obtain information regarding an entitys investment in its property, plant and equipment and any changes in such investment. Property, plant and equipment is initially measured at its cost. Tutorial ias 16 property plant and equipment requires. You can almost guarantee that in every exam you will be required to account for property, plant and equipment at least once. In1a the hkicpa amended the scope of hkas 16 in 2014 to include bearer plants related to agricultural activity. Find out more about the benefits of membership and joining details. Initial recognition the basic principle of ias 16 is that items of property, plant and equipment that qualify for recognition should initially be measured. The accounting for international accounting standard ias 16, property, plant and equipment is a particularly important area of the financial reporting syllabus.
Convergence on other fixedassetrelated accounting matters is not planned at this time. Hence, it may increase the line items in fixed asset register and work of physical verification for each identifiable component. This lesson will concentrate on the acquisition of property, plant, and equipment. Property plant and equipment ias 16 linkedin slideshare. Iasb publishes proposed amendments to ias 16 regarding. Assets acquired through bulk or aggregate purchases may be grouped into one or more property record units in accordance with the guidance in section 2k of this. The difference between the cash price equivalent and the total payment if payment is deferred beyond normal credit terms is recognized as interest over the period of credit, unless. Compustat business information files 16 segment naics file 19 naics reference file codes 20. Fixed assets such as property, plant, and equipment. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, or depreciated so that its depreciable amount is allocated on a systematic basis over. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Illustrative financial statements 2016 deloitte us. Exposure draft of the accounting standard as 10 revised, property plant and equipment the accounting standards board asb of the institute of chartered accountants of india icai at its 207 th meeting considered for the upgradation of existing accounting standards in the context of the revised roadmap for implementation of ind as.
Bearer plants the amendments to frs 16 and frs 41 define a bearer plant and require a biological asset that meets the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with frs 16, instead of frs 41. Start studying chapter 10 property, plant, and equipment and intangible assets. An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Academic resource center property, plant, and equipment page 4 executive summary ifrs permits periodic revaluation of an entire class of fixed assets to fair value. Thus, payments made in advance by a lessee under a finance lease do not constitute property, plant and equipment, and are accounted for according to the principles prescribed for leases. The accounting for ind as 16, property, plant and equipment is a particularly important area of the paper f7 syllabus. Apr 15, 2014 overview ias 16 property, plant and equipment outlines the accounting treatment for most types of property, plant and equipment. Chapter 10 property, plant, and equipment and intangible. Bc11 as a consequence of placing all subsequent expenditures under ias 16s general recognition principle, the board also included those expenditures under ias 16s derecognition principle. Acquisition and disposition of property, plant, and equipment bob anderson, ucsb chapter 102 4 property, plant, and equipment fixed asset or plant asset historical cost principle includes any normal or routine expenditure to get an asset in place and functioning. Accounting for property, plant, and equipment federal financial accounting standards no. Plant property and equipment property plant and equipment. One category is called property, plant, and equipment.
The item which meets the following criteria will be. Section 16 investment property applies to investment property whose fair value can be measured reliably without undue cost or effort. Procedure for property, plant and equipment management status. Indian accounting standard ind as 16 property, plant and. Property plant and equipment acquisition fixed asset. Ias 16 outlines the accounting treatment for most types of property, plant and equipment. Obtaining an understanding of the internal control over property, plant, and equipment. Summary of main changes ipsas 17 property, plant and equipment. There is no current plan to expand this work to impairment of tangible assets. They are not made available for sale in the ordinary course of business.