2430403
Description
Mind Map by Ahmed Noor, updated more than 1 year ago
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Created by Ahmed Noor
about 9 years ago
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IAS16- Property, Plant and Equipment
- Definition
- 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.
- 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.
- When should an item of PPE be recognised?
- 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
- 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
- Measurement of PPE
- An item of PPE should be measured at its cost.
- There are three components of Cost:
- 1. Purchase price which includes import duties and
non-refundable purchase taxes, less trade discounts
or rebates.
- 2. Directly attributable costs to bring the asset to
the location and condition necessary for it to be
capable of operating
- 3. The initial estimated costs of dismantling and removing the item and
restoring the site on which the item is located.
- 1. Purchase price which includes import duties and
non-refundable purchase taxes, less trade discounts
or rebates.
- There are three components of Cost:
- An item of PPE should be measured at its cost.
- Subsequent measurement of PPE
- IAS16 allows two different ways of measuring PPE subsequent to its initial recognition as an
asset
- The Cost model
- After initial recognition, items of PPE are carried at cost less
any accumulated depreciation and less any accumulated
impairment losses.
- After initial recognition, items of PPE are carried at cost less
any accumulated depreciation and less any accumulated
impairment losses.
- Revaluation model
- 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.
- 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.
- The Cost model
- IAS16 allows two different ways of measuring PPE subsequent to its initial recognition as an
asset
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