Hernani, Christopher 506 9-12 MW  Tangible assets … probable future As 1 line item: Property, Plant, and

DEFINITION  Used for production of RECOGNITION economic benefits CLASSIFICATION PRESENTATION Equipment
PAS 16 goods or services, for will flow to the entity Non-current Assets
With disclosures on composition,
rentals or for administrative
… the cost can be carrying amounts, and other
purposes
measured reliably necessary information on the Notes
`  Expected to be used during
more than one period
PROPERTY, PLANT AND COST MODEL Cost – accumulated depreciation – accumulated impairment loss

EQUIPMENT MEASUREMENT Initial: @ Cost

Subsequent: Cost Model; or

REVALUATION MODEL Revalued Amount – accumulated depreciation – accumulated impairment loss
Revaluation Where Revalued Amount is either…
DEPRECIATION
MATCHING PRINCIPPLE
ACQUISITION Fair Value or;
Depreciated Replacement Cost [Sound Value]
UNIFROM CHARGE
STRAIGHT LINE CASH ON ACCOUNT INSTALLMENT ISSUANCE ISSUANCE EXCHANGE EXCHANGE
(Cost – Scrap Value)/ Useful Cash Paid or; Invoice Price Cash Price; SHARE CAPITAL BONDS PAYABLE NO COMMERCIAL SUBSTANCE W/ COMMERCIAL SUBSTANCE
Life in years less: Discount CA of asset given + cash
a. FV or asset received a. FV of bonds NO CASH
Equivalent If not available Cash Price,
OR Whether taken or b. FV or share capital payment [PAYOR]
Cash Price b. FV of asset received
Depreciable Amount x c. Par or stated value a. FV of Asset given
not PV of all payments using c. Face Value of bonds
annual depreciation rate CA of asset given – cash b. FV of Asset received
an implied interest rate of share capital
payment [PAYYEE] c. CA of asset given
EXCHANGE DONATION CONSTRUCTION CAPITALIZABLE COSTS
COMPOSITE WITH CASH
TRADE IN Direct Materials Purchase Price Survey Cost Borrowing Costs
Direct Labor PAYOR FV of asset given +
Composite life = total a. FV of asset given + Legal Fees Building Permit Excavation
Overhead cash payment
depreciable amount/total cash payment Commission Fees Insurance (during construction) Architect Fee
annual depreciation b. Trade In Value of Escrow Fees Freight Storage Fee PAYEE FV of asset given –
asset given + cash Mortgages Assumed Installment Cost Insurance (while in cash payment
Composite Rate = total payment Interest Assumed Testing Costs transit)
annual depreciation/total Unpaid Taxes up to date of Net Demolition Cost Estimated
cost acquisition Cost of Option dismantling cost
GROUP Irrecoverable taxes Rearrangement Costs (present obligation)
And other costs necessary to bring the PPE to the location and condition for their intended use
Total Cost x Annual
Depreciation Rate

OTHER METHODS
VARIABLE CHARGE
DECREASING CHARGE NO ACCUMULATED DEPRECIATION MAINTAINED

WORKING HOURS PRODUCTION
Rate = Depreciable Rate = Depreciable
Amount/Estimated Amount/Estimated
Working Hours useful life in terms of
units of output
Depreciation = Rate x
Actual Working Hours Depreciation = Rate x
Actual Units of Output
SUM OF YEAR’S DIGITS
SYD = Life[(Life+1)/2]
Charge = (Life – n) x
Depreciable Amount
n is the expired portion of
the useful life in years
DECLINING BALANCE DOUBLE DECLINING BALANCE INVENTORY METHOD RETIREMENT METHOD REPLACEMENT METHOD
Rate = 1 – nth root of Rate = Straight Depreciation = Depreciation = Cost – Depreciation =
(Residual Value/Cost) Line Rate x 2 Balance – Value at salvage proceeds
Replacement Cost – salvage
year end
Charge = Rate x proceeds
n is the useful life in
years Carrying Amount
Rate x Carrying Amount