Seatwork 01 Overview

Property, Plant and Equipment (PPE)

A. Based on the pdf notes in the Discussion and notes folder about PPE, answer the following on the space
provided.

Fixed assets, often known as property, plant, and

equipment, are long-term physical assets. Industries
that are deemed capital intensive have a
1. Definition of property, plant and
considerable number of fixed assets, such as oil
equipment.
corporations, auto manufacturers, and steel firms. It
refers to a company's physical or tangible long-term
assets with a lifespan of more than a year.

1. Buildings
2. List at least 5 account titles which can 2. Machinery
be classified as PPE 3. Land
4. Office Equipment
5. Furniture

The conditions under which an item that meets the

definition of an element shall be recognized (or
included) in financial statements are outlined in this
statement's recognition criteria.
3. Recognition criteria a. If it is likely that future economic
advantages connected with the asset will
a. When to recognize PPE? flow to the company and the cost of the item
can be assessed accurately, an item of PPE
should be classified as an asset. When the
risks and rewards of asset ownership have
been transferred to the entity, future
economic advantages will be realized.

a. Property, plant, and equipment are originally

4. Measurement
costed, then measured using a cost or
revaluation model, and then depreciated
a. Initial
such that the depreciable amount is allocated
on a systematic basis over the useful life of
the asset.
b. Subsequent
b. PPE is assessed using either a cost model or
a revaluation approach after first
recognition. The carrying value of PPE is
calculated using the cost model, which
subtracts any cumulative depreciation and
impairment losses.

The cost of PPE includes the asset's purchase price,

5. What are the elements/components of
cost of PPE?
6. What are the different methods of
depreciation?
non-recoverable duties and taxes, and any directly
related expenditures paid to get the asset suitable for
use in the way planned by the entity's management.
Depreciation can be calculated in four ways:
straight line, declining balance, sum-of-years' digits,
and units of production.
 When PPE is discarded or when no future economic
advantages are predicted from its use or disposal, it
7. Derecognition criteria
should be derecognised (removed from PPE). The
a. When to derecognize PPE?
difference between the disposal revenues and the
carrying value of the asset at the time of disposal is
recorded as a gain or loss on disposal.