Property, plant and equipment (formerly know as Tangible fixed assets, in short PPE) are tangible items that:
- are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
- are expected to be used during more than one period.
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.