IFRS Standard: IAS 16 Property, Plant and Equipment

The accounting treatment for property, plant and equipment explained so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to the

IAS 16 Objective Scope Definitions

Objective

1 The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, …

Read More

IAS 16 Recognition

7 The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:

  1. it is probable that future economic benefits associated with the item will flow to the entity; and
  2. the cost of the item can be measured reliably.

8 Items such as spare parts, stand-by equipment and servicing equipment are recognised …

Read More

IAS 16 Measurement at recognition

15 An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost.

Elements of cost

16 The cost of an item of property, plant and equipment comprises:

  1. its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
  2. any costs directly attributable to bringing
Read More

IAS 16 Measurement after recognition

29 An entity shall choose either the cost model in paragraph 30 or the revaluation model in paragraph 31 as its accounting policy and shall apply that policy to an entire class of property, plant and equipment.

29A Some entities operate, either internally or externally, an investment fund that provides investors with benefits determined by units in the fund. …

Read More

IAS 16 Derecognition

67 The carrying amount of an item of property, plant and equipment shall be derecognised:

  1. on disposal; or
  2. when no future economic benefits are expected from its use or disposal.

68 The gain or loss arising from the derecognition of an item of property, plant and equipment shall be included in profit or loss when the item is derecognised (unless …

Read More

IAS 16 Disclosure

73 The financial statements shall disclose, for each class of property, plant and equipment:

  1. the measurement bases used for determining the gross carrying amount;
  2. the depreciation methods used;
  3. the useful lives or the depreciation rates used;
  4. the gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; and
Read More