IAS16- Property, Plant and Equipment

Ahmed Noor
Mind Map by Ahmed Noor, updated more than 1 year ago
Ahmed Noor
Created by Ahmed Noor almost 5 years ago
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Mind Map on IAS16- Property, Plant and Equipment, created by Ahmed Noor on 04/03/2015.

Resource summary

IAS16- Property, Plant and Equipment
1 Definition
1.1 IAS16 defines PPE as 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.
2 When should an item of PPE be recognised?
2.1 Recognised as an asset when its cost can be measured reliably and it is probable that future economic benefits associated with the item will flow to the entity
3 Measurement of PPE
3.1 An item of PPE should be measured at its cost.
3.1.1 There are three components of Cost:
3.1.1.1 1. Purchase price which includes import duties and non-refundable purchase taxes, less trade discounts or rebates.
3.1.1.2 2. Directly attributable costs to bring the asset to the location and condition necessary for it to be capable of operating
3.1.1.3 3. The initial estimated costs of dismantling and removing the item and restoring the site on which the item is located.
4 Subsequent measurement of PPE
4.1 IAS16 allows two different ways of measuring PPE subsequent to its initial recognition as an asset
4.1.1 The Cost model
4.1.1.1 After initial recognition, items of PPE are carried at cost less any accumulated depreciation and less any accumulated impairment losses.
4.1.2 Revaluation model
4.1.2.1 After initial recognition, items of PPE are carried at a revalued amount. The revalued amount of an item consists of its fair value at the date of revaluation, less any subsequent accumulated depreciation and less any subsequent accumulated impairment losses.
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