Lkas 16 sri lanka accounting standardlkas 16 property, plant and equipment sri lanka accounting standard lkas 16 property, plant and equipment is set out in paragraphs 181. The cost of an item of property, plant and equipment includes the costs of its dismantlement. Property, plant and equipments classified as held for sale ind as 105 biological assets related to agricultural activity other than bearer plants ind as 41 exploration and evaluation assets ind. Acquisition, valuation and disposition of property, plant, and equipment intermediate accounting 2. Ias 16 refers to tangible noncurrent assets as property, plant and equipment ppe and recognises that they possess a physical substance, are held for use in the production of. Ind as 16 does not prescribe the unit of measure for recognition of assets, and entities need to exercise judgement when applying the recognition criteria to property, plant and equipment ppe. Hkas 16 property, plant and equipment the hong kong institute. 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. Ias 16 property, plant and equipment cpa australia. Ias 16 outlines the accounting treatment for most types of property, plant and equipment. Nz ias 16 this version is effective for reporting periods beginning on or after 1 jan 2019 early adoption permitted. Adeel august 18, 2016 august 23, 2016 2 comments on summary notes.
This chapter, however, deals with the two measurement models that ias 16 allows you to apply. Property, plant and equipment are tangible items that. An item of property, plant and equipment must be measured at cost initially according to ias 16 property, plant and equipment. Forprofit prescribes the accounting treatment for property, plant and equipment. Ias 16 property, plant and equipment martin kelly, bsc. Ias 16 property, plant and equipment a closer look. 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.
Valuation at depreciated replacement cost is allowed when there is no real market value, because of the specialised nature of the assets. An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost. 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. A presentation to practitioners and preparers of financial statements on lkas 16 on 12th june 2012 elements of. 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. This indian accounting standard includes paragraphs set in bold type and plain type. Ias 16 property, plant and equipment adeel august 18, 2016 august 23, 2016 2 comments on summary notes. Frs 102 summary section 17 property, plant and equipment. The objective of indas 16 is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entitys investment in its property, plant and equipment and the changes in such investment. Deloitte comment letter on the iasbs proposed amendments. They are not made available for sale in the ordinary course of business.
Ias 16 was reissued in december 2003 and applies to annual periods. Ind as 16 property, plant and equipment ind as 16 vs as 10. 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. Rdr amendments cannot be applied to periods beginning before 1 july 2009. Sri lanka accounting standardlkas 16 property, plant and. The objective of ias 16 is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern.
Ias 16 property, plant and equipment download pdf, 651kb. An overview of the requirements of ias16 including reference to ind as on 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 in relation to them. Ias 16 property, plant and equipment 2017 07 2 cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when. 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. We offer the most relevant finance qualification for business. 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. Property, plant, and equipment is defined as tangible assets that are held for use in production or supply of goods.
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. Iasb proposes to amend ias 16 in relation to the accounting for proceeds from selling items produced before an item of property, plant and equipment is available for use 2 the iasb considered making amendments to limit the deductions from the cost of ppe to proceeds from testing, and that the deduction could not exceed the costs of testing. The cost of an item of property, plant and equipment comprises. Hong kong accounting standard 16 property, plant and equipment objective 1. Property, plant and equipment ind as 16 property, plant and. Scope accounting for property, plant and equipment except when another standard requires or permits a different accounting treatment. Property, plant, and equipment ias 16 ifrs practical. Dec 21, 2015 section 17 property, plant and equipment summary. Educational material on ind as 16 property, plant and equipment. Shahreen sonia lecturer, advanced accounting department of business administration dba green. Download pdf, 651kb ias 16 property, plant and equipment ifrs, ifrs summary notes, summary notes. The cost of an item of property, plant, and equipment shall be recognized as an asset only if it is probable that future economic benefits associated with the item will flow to the entity and. International accounting standard 16, ias 16, prescribes rules regarding the recognition, measurement and disclosures relating to property, plant and equipment, which are often referred to as fixed assets that would enable users of financial statements to understand the extent of an entitys investment in such assets and the movements therein. Ias 16 property, plant and equipment ifrs standards.
Hong kong accounting standard 16 property, plant and equipment. Following embedded snippet contain the summary of ias 16 property, plant and equipment. 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. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the.
Ias 16 property, plant and equipment ifrsbox making ifrs easy. Summary of main changes ipsas 17 property, plant and equipment. Property, plant and equipment is initially measured at its cost. Property, plant and equipment ias 16 understanding. Bearer plants will fall under the scope of ias 16 while the produce grown on the plants will remain under ias 41. Definitions property, plant and equipment property, plant and equipment are tangible items that. Property, plant and equipment proceeds before intended use. However, there are difficulties of obtaining a market value for plant and equipment that are recognised in ias 16.
Lecturer in accounting limerick institute of technology. Framework to refine the concepts so as to apply to property, plant and equipment. Educational material on ind as 16, property, plant and. Tutorial ias 16 property plant and equipment requires that. Elements of cost the cost of an item of property, plant and equipment comprises. Ias 16 states that the cost of an item of property, plant and equipment shall be recognized as an asset if, and only if. Summary of main changes ipsas 17 property, plant and. Depreciation of an asset begins when it is available. The accounting for ias 16, property, plant and equipment is a particularly important area of the paper f7 syllabus. Property, plant and equipment ias 16 and borrowing. This article deals with ias 16 property, plant and equipment ppe and the accounting. This compiled standard applies to annual reporting periods beginning on or after 1 july 2009 with early application of the reduced disclosure requirements rdr.
Indian accounting standard ind as 16, property, plant and equipment prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entitys investment in its. 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. Finally, the authors assert, the characteristic of consistency favors the use of fair value in measuring items of property, plant, and equipment. Ifrs page 1 of 16 ehab abdou 97672930 introduction. This course is part of the ifrs certificate program a comprehensive, integrated curriculum that will give you the foundational training, knowledge, and practical guidance in international accounting standards necessary in todays global business environment this selfstudy course addresses requirements of ias 16, property, plant and equipment, and ias 23, borrowing costs, including the. Lkas 16 property, plant and equipment sujeewamudalige partner, pwc 12 june 2012. The transitional provisions in paragraphs 8095 to 87104 provide relief from the requirement to recognize all property, plant and equipment during the five year transitional period. 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. Property, plant and equipment ind as 16 property, plant. Property, plant and equipment with a net book value of. Obtaining an understanding of the internal control over property, plant, and equipment. The standard requires the entity to recognize the effects of the initial public sector recognition of property, plant and equipment as an adjustment to the opening balance of accumulated surpluses or deficits for the period in which the property, plant and equipment is initially recognized in.
The objective of ias 16 is to prescribe the accounting treatment for property, plant and equipment ppe so that users of the financial statements can discern information about an entitys investment in its ppe and the changes in such investment. Find out more about the benefits of membership and joining details. It incorporates relevant amendments made up to and including 30 june 2010. Ias 16 property, plant and equipment march 2016 property, plant and equipment and ias 38 intangible assetsvariable payments for asset purchases the interpretations committee received a request to address the accounting for variable payments to be made for the purchase of an item of property, plant and equipment or an intangible asset that. 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 entitys investment in its property, plant and equipment and the changes in. Property, plant and equipment ppe the cost of an item of ppe will now be the cash price equivalent at the recognition date. As they are of significant value therefore, recognition, measurement and subsequent valuation of these assets is important not only in presenting financial statements but also for investment decisions as it forms the backbone of entitys financial strength. In1 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. As standard said, each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. Systems, jahangirnagar university, savar, slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. This module focuses on the accounting and reporting of property, plant and equipment applying section 17 property, plant and equipment of the ifrs for smes standard. The same rule for revaluation of property applies to plant and equipment.
It introduces the subject and reproduces the official text along with explanatory notes and examples designed to enhance understanding of the requirements. Cima is the worlds largest professional body of management accountants. Lkas 16 should be read in the context of its objective and the basis for conclusions, the. You can almost guarantee that in every exam you will be required to account for property, plant and equipment at least once. If cash payment is deferred beyond normal credit terms, then the asset must be recognized at the present value of the future payment and differential amount will be recognized as finance cost.
Hong kong accounting standard 16 property, plant and equipment hkas 16 should be. Educational material on ind as 16, property, plant and equipment 14082017 share this page. Ias 16 describes the accounting treatment for property, plant and equipment unless another standard requires or permits a different accounting treatment. Exposure draft ed20174 property, plant and equipmentproceeds before intended use proposed amendments to ias 16 is published by the international accounting standards board board for comment only. Once we have established that an item must be recognised as an item of property, plant and equipment i. Accordingly, icai clarified that entities should determine whether an individual item is insignificant. It might take a little while to load so be patient. Ias 16 requires that property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model required discuss the requirements of ias 16 if companies choose the revaluation model and critically discuss. The accounting for ind as 16, property, plant and equipment is a particularly important area of the paper f7 syllabus. This article is designed to outline the key areas of ias 16, property, plant and equipment that you may be required to attempt in the financial reporting exam.
The depreciation charge for each period shall be recognized in profit or loss unless it is included in the carrying amount of another asset. Included are land, buildings, leasehold improvements, equipment, furniture, fixtures, delivery trucks, automobiles, etc. To read the whole embedded document use the navigational links at the bottom of. Hong kong accounting standard 16 property, plant and. Property, plant and equipment continued all of the groups hotel properties and buildings are situated in mainland china and are held under the following lease terms. Depreciation of an asset begins when it is available for use, that is, when it is in the location and condition. Iasb publishes amendments to ias 16 property, plant and equipment and ias 38 intangible assets project update released on 12 may 2014 announcing a clarification of acceptable methods of depreciation and amortisation. As 10 revised property, plant and equipment powerpoint. 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. Icai the institute of chartered accountants of india. The selection of property record units determines the manner in which costs are. The objective of ias 16 is to provide information about property, plant and equipment so that the users of the financial statements can identify information about the entitys own investment in its property, plant and equipment and the changes in such investment. This article is designed to outline the key areas of ias 16.
Section 17 deals with the initial recognition, subsequent measurement, depreciation and impairment for property, plant and equipment ppe held for use in the production, or supply of goods and services, for rental to others or administrative purposes. Ias 16 is applied in accounting for property, plant and equipment. Definition property, plant and equipment ppe are tangible assets that. Introduction this chapter is really a continuation of the last chapter in that both chapters relate to property, plant and equipment and both are therefore governed by ias 16.
It is the second long term asset section after current assets. Property, plant and equipment outlines the accounting treatment for most types of property, plant and equipment. Accounting for property, plant and equipment acca global. Property, plant and equipment provides guidance on specific class of tangible noncurrent assets. Risks associated with property, plant and equipment inherent risks 10. In1a the hkicpa amended the scope of hkas 16 in 2014 to include bearer plants related to agricultural activity. The cost of an item of property, plant and equipment is recognised as an asset if, and only if.
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