FACULTY OF BUSINESS

SCHOOL OF ACCOUNTING

REPORT TITLE

TEAM WORK

AUTHOR(S):

CUNYA RONDOY NOELIA

ADVISOR:

GALVEZ GODS, CARLOS ALBERTO

LINE OF RESEARCH

Finance

PIURA – PERU

(2023)
INTRODUCTION
Due to business competition in the world, and the hectic environment that flows
information in companies, it is necessary to be able to understand a company
from its accounting information bases, not doing so would lead an entity to make
the mistake of making decisions wrong and as a consequence, it may incur
economic losses.

In April 2001 the International Accounting Standards Board (Board) adopted IAS
16 Property, Plant and Equipment, which had originally been issued by the
International Accounting Standards Committee in December 1993. IAS 16
Property, Plant and Equipment replaced IAS 16 Accounting for Property, Plant
and Equipment (issued in March 1982). IAS 16 which was issued in March 1982
also superseded some parts of IAS 4 Accounting for Depreciation which was
approved in November 1975.

For a company it must be the knowledge and interpretation of its own financial
information, for this it must have the tools that help it meet this requirement that
is of vital importance to carry out its main objectives such as expansion and
globalization, in the world that changes daily for a company to stay ahead in the
economic environment every day becomes more difficult, therefore the
implementation of new techniques in its reason for being are important but all this
depends on the strong bases of information that it has .

The objective of this Standard is to prescribe the accounting treatment of

property, plant and equipment, so that users of the financial statements can know
the information about the investment that the entity has in its property, plant and
equipment, as well as the changes that have occurred in said investment. The
main problems presented by the accounting recognition of property, plant and
equipment are the accounting of the assets, the determination of their book value
and the charges for depreciation and impairment losses that must be recognized
in relation to them.
Property Plant and Equipment

Property, plant and equipment represent tangible assets acquired, built, or under
construction, with the intention of using them permanently, for the production or
supply of other goods and services, to lease them, or to use them in
administration. of the economic entity, which are not intended for sale in the
normal course of business and whose useful life exceeds one year" (Molina,
2018).

Property, plant, and equipment are tangible assets held by a business for use in
the production or supply of goods and services, for lease to third parties, or for
administrative purposes, and are expected to be used over more than one
financial period. International Accounting Standard 16 establishes the treatment
for accounting for Property, Plant and Equipment. This treatment serves so that
the users of the Financial Statements can know the investment that has been
made, as well as the changes that have been presented due to deterioration,
obsolescence, expropriation or due to an exchange of Silver Property and
Equipment.

STARTUP COSTS

Some items of property, plant and equipment may be acquired for safety or
environmental reasons. Although the acquisition of such property, plant and
equipment does not increase the economic benefits provided by existing items of
property, plant and equipment, it may be necessary for the entity to achieve the
economic benefits from the remaining assets. These items of property, plant and
equipment meet the conditions for recognition as assets because they allow the
entity to obtain additional economic benefits from the rest of its assets, with
respect to those that it would have obtained if it had not acquired them. For
example,

SUBSEQUENT COSTS

In accordance with the recognition criteria in paragraph 7, the entity shall not
recognize, in the carrying amount of an item of property, plant and equipment,
the costs of daily maintenance of the item. Such costs will be recognized in the
result when they are incurred. Daily maintenance costs are mainly labor costs
and consumables, which may include the cost of small components. The purpose
of these expenditures is often described as “repairs and upkeep” of the item of
property, plant, and equipment.

Certain components of some items of property, plant and equipment may need
to be replaced at regular intervals. For example, an oven may need servicing and
replacement after a certain number of hours of operation, and interior
components of an aircraft, such as seats or galley facilities, may need to be
replaced several times throughout the life of the aircraft.

Subsequent measurement of Property, Plant and Equipment

To present the management of these assets, Management could choose

between two subsequent measurement approaches: cost model and revaluation
model:

1. Cost Model:
It will be recognized for the acquisition cost less (-) accumulated depreciation and
the accumulated amount of impairment losses.

2. Revaluation Model:
It will be accounted for at the revalued value (fair value) less (-) accumulated
depreciation and the accumulated amount of impairment losses.

"Under both models, Management must quantify the effects of the fixed asset on
the results of the business, as a result of enjoying its benefits. IAS 16 indicates
that this measurement involves estimating its useful life (investment recovery
time), its residual value (the expectation of sale of the asset at the end of its
recovery) and the depreciation method (which is the way in which the benefits of
the asset are used).According to the accounting standard, these aspects must be
reviewed, as a minimum, in each period of presentation of the financial
statements", assures José Carlos Capuñay.
Depreciation of Property, Plant and Equipment

In accordance with IAS 16, each part of an item of Property, Plant and Equipment
that has a significant cost in relation to the total cost of the item is depreciated
separately. That is to say, the depreciation charge for each period will be
recognized in the result of the same, unless it has been included in the book value
of another asset.

Depreciation methods:
1. Linear
A constant charge will be generated throughout the useful life of an asset, as long
as its residual value does not change. That is, during the course of the useful life
of the asset, the quotas that will be recorded in the depreciation of the asset will
be the same.

2. decreasing
It will be based on the balance of the element, which means that the depreciation
charge will decrease throughout the useful life of the asset.

3. Production Units Method

Will result in a charge based on expected utilization or production. That is to say,
this type of depreciation goes according to the productive capacity of the good
that is going to be depreciated.
REFERENCES

Vasquez, JC (February 19, 2021). International Accounting Standard 16: Property, Plant and
Equipment. Retrieved from https://www.esan.edu.pe/conexion-esan/norma-
internacional-de-contabilidad-16-propiedades-planta-y-
equipo#:~:text=La%20NIC%2016%20indica%20que ,of%20%20benefits%20of%20asset

Vasquez, E. (March 2018). Property, Plant and Equipment. Retrieved from

https://www2.deloitte.com/content/dam/Deloitte/cr/Documents/audit/documentos/
niif-2019/NIC%2016.pdf

Guerrero, FA (June 15, 2021). PLANT PROPERTY AND EQUIPMENT NIC 16. Retrieved from
https://repository.unimilitar.edu.co/bitstream/handle/10654/36408/RamirezGuerrero
FredyAlexander2020.pdf?sequence=1&isAllowed=y

Figueroa. (nd). PROPERTY, PLANT AND EQUIPMENT. Retrieved from

https://www.eafit.edu.co/escuelas/administracion/consultorio-
contable/Documents/C%20PPE%20NIC%2016.pdf

Seminar. (September 7, 2018). Subsequent measurement of property, plant and equipment.

Concept 648 of 2018. Retrieved from
https://accounter.co/normatividad/conceptos/medicion-posterior-propiedad-planta-
y-equipo-concepto-648-de-2018.html#:~:text=Resumen%3A%
20In%20s%C3%ADnthesis%2C%20an%20entity,equipment%20(cost%20o%20revaluati
on%C3%B3n).