Property, plant and equipment

Property, plant and equipment (formerly know as Tangible fixed assets, in short PPE) are tangible items that:

  1. are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
  2. are expected to be used during more than one period.

Additional considerations:

Certain properties which are used on rental are classified as an investment property in which case IAS 40 Investment property will apply. Only tangible items which have a useful life of more than one period are classified as PPE as per IAS 16. But refer to the words “ more than one period” as more than one accounting period of 12 months.

Also, an entity shall determine a threshold limit commensurate to its size for recognizing a tangible item as PPE. For example, a tangible item of insignificant amount although satisfying the definition of PPE may be expensed.

External information:

https://en.wikipedia.org/wiki/Fixed_asset

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