LAS 16 PROPERTY, PLANT & EQUIPMENT bins 1922, IASB has developed IAS 16 for the first time. eMany avaenarants followed © Objective: How to account for property, plant § equipment What? How much?© Scope: > Tangible items hela for: v Production v Rental a v Administration a Land oF Building for Rental: AS 40: nvestruent Property AND » Expected to be used during more than one period.Luitial Measurement Recognition of property, plant and equipment depends on two eviteria: > Probable that future economic benefits associated with the asset will flow to the -Initial measurement at COST COST= Purchase price (including import duties and non-refundable purchase taxes) + yu Directly attributable costs + Removal Cost > The cos of te asst tothe entity can be vo vaensured reliably any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by The present value of these costs should be management, except Administration and copitalised, with an equivalent liability set other general overhead costs, Start-up Lup. The discount on this liability would pcaaten Doe Die reane rae then be unwound over the period until the ‘onormal los, Initial operating losses Palla ira ented re atone reaches partes ismantting costs are paid. This means performance the lability increases by the interest rate each year, with the increase taken to finance costs in the statement of profit or lossSubsequent Measurement COST MODEL REVALUATION MODEL COST - ACCUMULATED FAIR VALUE ~ SUBSEQUENT DEPRECIATION ~ ACCUMULATED ACCUMULATED DEPRECIATION — IMPAIRMENT LOSS SUBSEQUENT ACCUMULATED IMPAIRMENT LOSSREVALUATION MODEL Carrying Amount RS oy oD Credit to Equity Credit to Income Debit to Expenses Debit to Equity = Revaluation -If reverses if reverses previous Surplus previous decrease increase in in profit or loss revaluation surplus “+ ENTIRE RS TRANSFERRED TO RE IN CASE OF DISPOSAL ‘+ APART OF THE RS CAN BE TRANSFERRED TO RE EACH AA YEAR BASED ON DIFFERENCE BETWEEN DEPRECIATION 22“ BASEO ON HISTORICAL COST & ON REVALUED << AMOUNTDepreciation o The depreciable amount ts allocated on a systematic basis over the asset’s useful Life o The resioual value, the useful life and the depreciation method of aw asset are reviewed annually at reporting date 0 Depreciation is charged to profit or Loss © Depreciation commences when the asset is available for use. Component accounting (Like Atroraft- Body, Engine, Landing gear, Cabin etc.) 0 Significant parts/components are vequired to ve depreciated over their estinaated useful life 0 Costs of replacing conmponents are required to be capitalizedMajor tuspectton/ Overhauling: Continued operation of aw itera of property, plant ana equipment (PPE) may require regular major inspections for faults regardless of whether parts of the ikem ave replaced. When each vanjor inspection is performed, its cost is recognized in the carrying avaount of the item of PPE as a replacement if the recognition criteria ave satisfied. Derecognition of PPE GAIN or LOSS - are included in SOPL but not as REVENUE = Net Disposal Proceeds - Carrying Amount