To prescribe the accounting treatment for property, plant, and equipment so that users of the

IAS 16: POPERTY, PLANT,

OBJECTIVE: financial statements can discern information about an entity’s investment in its PPE and the changes
AND EQUIPMENT in such investment.

This standard shall be applied in accounting for Property, plant, and equipment except when another
SCOPE: standard requires or permits a different accounting treatment.

RECOGNIZE IF: MEASUREMENT AT TRANSITIONAL PROVISIONS DISCLOSURE

1. It is probable that future
benefits associated with
the item will flow to the
entity
2. If the cost can be reliably
measured
INITIAL COST
 Items of PPE may be
acquired for safety or
environmental reasons.
SUBSEQUENT COST
 Cost of day to day
servicing are primarily the
cost of labor and
consumables; and may
include the cost of small
parts.
RECOGNITION
 Item of PPE that qualifies
for recognition as an asset
shall be measured at its
cost.
ELEMENTS OF COST
1. Purchase price
2. Directly attributable cost
3. Initial estimate for the
cost of dismantling and
removing the item
MEASUREMENT OF COST
Cost of an item of PPE is the
cash price equivalent at the
recognition date
Requirements of PAR 24-26
regarding the initial measurement of
an item of PPE acquired in an
exchange of asset transaction shall
be applied prospectively only to
future transactions.
DERECOGNITION
The carrying amount of an item of
PPE shall be derecognize on disposal
or when no future benefits are
expected from its use or disposal.
 If PPE are revalued, shall disclose:
1. Effective date
2. Carrying amount
3. Revaluation surplus
 Financial Statement shall disclose for
each PPE:
1. Measurement bases
2. Depreciation method used
3. Useful lives or depreciation
rates used
4. Gross carrying amount and
accumulated depreciation at
the beginning and end of the
period
5. Reconciliation of carrying
amount at the beginning and
end of the period
 Financial statements shall also
disclose:
1. Existence and amount of PPE
2. Amount of expenditures
recognized
3. Amount of contractual
commitments
4. Compensation (third parties)