Ifrs 5 noncurrent assets held for sale and discontinued. The principal issues are the recognition of assets, the determination of their carrying amounts, and the depreciation charges and impairment losses to be recognised in relation to them. Howver the following accounting standars arerelevant as well. Although ias 16 does not define the point at which compensation becomes receivable, ias 37 prohibits the recognition of contingent assets. Dr accumulated depreciation 12,500 cr nca cost 2,500. In the set of iasb standards, there are four rules that refer to the valuation of non financial fixed assets. Ias 16 deals with ppe which are tangible assets that are held for use in the production of goods or delivery of services or for an administrative purpose, and are expected to be used for more than one accounting period i. Comparison with ias 16, property, plant and equipment, ifric 1 and ifric 20. Ias 16 summary notes page 4 of 18 exchange of assets cost of asset acquired recognise at. Property, plant and equipment the hong kong institute of certified. This basis for conclusions accompanies, but is not part of, ias 16. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life. The requirements of ias 17, leases, apply when an entity leases out the real estate property or an entity does.
Any costs that are not directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management are expensed in pl as incurred. Initial expenditure the cost of an item of ppe comprises. Ias 16 property, plant and equipment cpa australia. In accordance with ias 16, all costs required to bring an asset to its present location and condition for its intended use should be capitalised. Pdf the revaluation of non current assets under ias 16 has now turned into a usual practice in pakistan. A class of assets is a grouping of assets that have a similar nature or function within the business. Ias 16 property plant and equipment examples pdf mindmaplab. Ifrs at a glance ifrs 5 noncurrent assets held for sale and. May 06, 2020 ias 16 property, plant and equipment covers the accounting issues related to these items.
Statements of cash flows 103 20 interpretation of accounts ratio analysis 1 21 ias 33 earnings per share 119 22 theoretical matters 127. Ifrs at a glance ifrs 5 noncurrent assets held for sale. Syllabus c2a discuss and apply the recognition, derecognition and measurement of non current assets including impairments and revaluations. As 105, non current assets held for sale and discontinued operations. Each model needs to be applied consistently to all non current assets of the same class. The carrying value of the asset at 31 march 2010 can now be found and revalued. Ias 16 allows entities the choice of two valuation models for its non current assets the cost model or the revaluation model. Scope of ias 16 ias 16 applies to the accounting for property, plant and equipment, except where another standard requires or permits differing accounting treatments, for example. International accounting standard 1 presentation of. Ias 16 outlines the accounting treatment for most types of property, plant and equipment. This article deals with ias 16 property, plant and equipment ppe and the accounting treatment for revaluation of tangible non current assets introduction ias 16 deals with ppe which are tangible assets that are held for use in the production of goods or delivery of services or for an administrative purpose, and are expected to be used.
Ias 16 property, plant and equipment 2017 07 pkf uk. Intangible non current assets these are assets that do not have a physical existence such as patent rights, licensing, software etc. Australian accounting standard aasb 116 property, plant and equipment as amended is set out in paragraphs 1 aus83. Ias 1 sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current non current distinction. This represents the bulk of items which are tangible non current assets. International accounting standard 16 property, plant and equipment or ias 16 is an international financial reporting standard adopted by the international accounting standards board iasb. The fixed assets that we will cover here refer to property, plant and equipment which is cover in ias 16 property, plant and equipment. Revenue from nonexchange transactions taxes and transfers. Ias 16 property, plant and equipment a closer look. Intangible assets ias 38 30 property, plant and equipment ias 16 31 investment property ias 40 32 impairment of assets ias 36 33 lease accounting ias 17, ifrs 16 34 inventories ias 2 35 provisions and contingencies ias 37 36 events after the reporting period and financial commitments ias. It concerns accounting for property, plant and equipment known more generally as fixed assets, including recognition, determination of their carrying amounts, and the depreciation charges and impairment.
It replaced ias 16 accounting for property, plant and equipment issued in march 1982. Ias 38 addresses intangible assets acquired by way of a government grant. The standing interpretations committee developed three interpretations relating to. Ias 16 was revised in 1998 and further amended in 2000.
International accounting standards board iasb issued the revised version of ias 16. Ias 21 the effects of changes in foreign exchange rates. This lecture is about property plant and equipment ppe ias 16. Non current assets i fixed assets i ppe i ias16 youtube. Intangible assets ias 38 30 property, plant and equipment ias 16 31 investment property ias 40 32 impairment of assets ias 36 33 lease accounting ias 17, ifrs 16 34 inventories ias 2 35 provisions and contingencies ias 37 36 events after the reporting period and financial commitments ias 10 38. Ias 16 property, plant and equipment was issued by the international accounting standards committee in december 1993. Ias 16 summary notes page 2 of 18 initial measurement initial measurement. Ias 16 shall be applied in accounting for property, plant and equipment except for. International accounting standard 36 impairment of assets.
Accounting for government grants and disclosure of government assistance ifrs 5. Ias 16, property, plant and equipment includes guidance on how to account for property carried at cost. Ias 20 accounting for government grants and disclosure of government assistance. This article deals with ias 16 property, plant and equipment ppe and the accounting treatment for revaluation of tangible non current assets. Ec staff consolidated version as of 16 september 2009, en eu ias 16 for information purposes only 2 depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. This standard applies to bearer plants but it does not apply to the produce on bearer plants.
International financial reporting standards ifrs cpdbox. Related standards ias 17 leases ias 20 accounting for government grants and disclosure of government assistance ias 23 borrowing costs ias 36 impairment of assets ias 40 investment property ifrs 2 sharebased payment ifrs 5 non current assets held for sale and discontinued operations. Ias 16 applies to property that is, buildings held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, if the property is expected to be used during more than one period. Noncurrent assets held for sale and discontinued operations. For ias 16 the boards main objective was a limited revision to provide additional guidance and clarification on selected matters. Carrying value of non current asset at revaluation date 100,000 100,00040 years x 5 years 87,500 valuation of non current asset 98,000 gain or loss on revaluation 10,500 double entry.
Unless it is tested on a standalone basis, an rou asset is tested in combination with other assets in a cash generating unit cgu. Ias 16 non current assets free download as powerpoint presentation. In practice, this means that expenditure is capitalized if it improves the asset for example, by enhancing its performance or extending its. Sale transactions include exchanges of non current assets for other non current assets when the exchange has commercial substance in accordance with ias 16 property, plant and equipment when an entity acquires a non current asset exclusively with a view to its subsequent disposal, it shall classify the.
Ias 16 property, plant and equipment summary cpdbox. An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. Introduction to ias 16 property, plant and equipment. The ifrs foundations logo and the ifrs for smes logo, the iasb logo, the hexagon device, eifrs, ias, iasb, ifric, ifrs, ifrs for smes, ifrs foundation, international accounting standards, international financial reporting standards, niif and sic are registered trade marks of the ifrs foundation, further details of which are available from the ifrs. Assets held for sale and discontinued operations b. Revaluations must be made regularly and kept current. Examples of costs that are not costs of an item of property, plant and equipment are. Non current assets held for sale and discontinued operations ias 40. Ias 16 property, plant and equipment martin kelly, bsc econ.
Bc1 this basis for conclusions summarises the international accounting standards boards considerations in reaching its conclusions on revising ias 16. International accounting standard 16 property, plant and equipment. Entityspecific value is the present value of the cash flows an entity expects to arise from the continuing. Ias 38 intangible assets covers the accounting issues related to these items. Accounting for non current assets 1 outline ias 16 property, plant and equipment ias 20 government grants ias 23 borrowing costs ias 40 investment properties ias 36 impairment of assets ias 38 intangible assets ias 2 property, plant and equipment objectives scope definitions content and application disclosure 3 objective it prescribes the accounting.
International accounting standard no 16 ias 16 tangible assets this revised standard replaces ias 16 revised 1998 property, plant and equipment, and will apply for annual periods beginning on or after january 1, 2005. Subsequent expenditure ias 16 on asset expenditure relating to non current assets, after their initial acquisition, should be treated as expense unless it meets the criteria for recognizing an asset. The depreciable amount cost less prior depreciation, impairment, and residual value should be allocated on a systematic basis over the. Therefore, the initial purchase price of the asset should be. Ias 16 was reissued in december 2003 and applies to annual periods. Before we discuss detail about the recognition, measurement, depreciation, and disclosure of fixed assets, we would like to mention the definition of property, plant and equipment as per ias 16.
Ias 16 refers to tangible non current assets as property, plant and equipment ppe and recognises that they possess a physical substance, are held for use in. International accounting standard 16 property, plant and. Any costs that are not directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by. Discuss and apply the recognition, derecognition and measurement of non current assets including impairments and revaluations. Ias 16 refers to tangible non current assets as property, plant and equipment ppe and recognises that they possess a physical substance, are held for use in the production of goods or delivery of services or for an administrative purpose, and are expected to be used for more than one accounting period. In such a situation, the recognition of the insurance recovery will only be appropriate when its realisation is virtually certain, in which case the insurance recovery is no longer a contingent asset. Additional disclosures when applicable the nature of the lessors leasing activities description of how the lessor manages the risk associated with any rights it.
Ias 16 objective of ias 16 the objective of ias 16 is to prescribe the accounting treatment for property, plant, and equipment. Ias 16 establishes principles for recognising property, plant and equipment as assets, measuring their carrying amounts, and measuring the depreciation charges and impairment losses to be recognised. Ias 16 non current assets international financial reporting. The only difference between an asset s fair value and its fair value less costs of disposal is the direct incremental costs attributable to the disposal of the asset. Financial reporting in hyperinflationary economies. On may 22, 2008, the iasb amended ias 16 for annual improvements to international financial reporting standards ifrs 2007 the effective date of may 2008 amendment to ifrs 5, non current assets held. The obligations for costs accounted for in accordance with ias 2 or ias 16 are recognised and measured in accordance with ias 37 provisions, contingent liabilities and contingent assets. Rightofuse rou assets are nonfinancial assets in the scope of ias 36.
A practical guide to accounting for property under the. The board did not reconsider the fundamental approach to the accounting for property, plant and equipment contained in ias 16. Ias 16 permits two accounting models for measurement of the asset in periods subsequent to its recognition, namely the cost model and the revaluation model. Ppt accounting for tangible non current assets masters af. The obvious reason is to give additional significant information to various stakeholders around an organizations balance sheet. The revaluation of non current assets under ias 16 has now turned into a usual practice in pakistan. Provisions, contingent liabilities and contingent assets. As 105, noncurrent assets held for sale and discontinued operations. Depreciation the depreciable amount cost less prior depreciation, impairment, and residual value should be allocated on a systematic basis over the asset s useful life. Expenditure relating to non current assets, after their initial acquisition, should be treated as expense. The objective of ias 16 is to prescribe the accounting treatment for property, plant, and equipment.
For selfconstructed assets, ias 2 comes useful as it is more focused on assets produced internally ias 16. The main changes from the previous version of ias 16 are. Presentation and disclosure requirements of ifrs 16 leases. Standard ias 16 prescribes the accounting treatment for property, plant and equipment and therefore it is one of the most important and commonly applied standards the main issues dealt in ias 16 are recognition of property, plant and equipment, measurement at and after recognition, impairment of property, plant and equipment although ias 36 deals with impairment in more detail and. If applicable, disclosure in accordance with ias 16 separately from other assets, ias 36 impairment of assets, ias 38 intangible assets, ias 40 and ias 41 agriculture. Property, plant and equipment initial measurement recorded. Ias 16 property, plant and equipment covers the accounting issues related to these items. Ifrs 16 may impact both the cgus carrying amount and the way the recoverable amount of the cgu is measured. Apply adaptations to ias 16 measure the asset at current value in existing use. For specialised assets, this will be the present value of the asset s remaining service potential on a drc mea basis frequency of valuations ias 16 requires that valuations should be made with sufficient regularity to. Ias 16 elements of cost 16 the cost of an item of property, plant and equipment comprises. Sri lanka accounting standardlkas 16 property, plant and.
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