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:
18.104.22.168 1. Purchase price which includes import duties and
non-refundable purchase taxes, less trade discounts
22.214.171.124 2. Directly attributable costs to bring the asset to
the location and condition necessary for it to be
capable of operating
126.96.36.199 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
4.1.1 The Cost model
188.8.131.52 After initial recognition, items of PPE are carried at cost less
any accumulated depreciation and less any accumulated
4.1.2 Revaluation model
184.108.40.206 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.