PRESENTATION

ON
TANGIBLE HELD FOR
ASSETS USE
LONG-TERM
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It
w  Establishes principles for recognizing property,
.
 0 03
2 plant and equipment as assets
 It is an International Financial Reporting
Standard.
 Adopted by the International Accounting
Standards Board (IASB). .
 Prescribe the accounting treatment
Objectives of
 Users of the financial statements can recognize IAS 16
information

P LY
AP
Applied in accounting for property, plant and
equipment except ---
When another standard requires or permits a
different accounting treatment.

SCOPE NOT
S
E Y
O
D PPL
A  Held for sale and are covered under
IFRS 5.
 Biological assets related to
agricultural activity
 Exploration and evolution assets and
mineral rights
 Recognition of PPE

Future Economic Cost Reliably

Benefit Measureable

 Is applied to all property, plant,

and equipment costs at the time
they are incurred.
 Costs include costs incurred
initially to acquire or construct
an item .
 Costs incurred subsequently to
add to, replace part of, or service
it.
Initial Measurement
Cost = Purchase Price + Directly Attributable Cost + Removal Cost

 Site preparation,
Original Price
 Delivery and handling,
 Installation, related professional fees
for architects and engineers,
 SUBSEQUENT MEASUREMENT

Cost Revaluation
Model Model

Cost less accumulated Carrying

depreciation and impairment. Amount

Increases Decreases
As a result of As a result of
revaluation revaluation
Depreciable Amount of an asset shall be allocated on a Systematic
Basis over its useful Life.

Depreciable Amount Useful Life Systematic Basis

How Much How Long How/In what

= Cost- Residual Value Manner

Depreciation
Period No of
Method
Units
DEPRICIATION
METHOD  
Straight line
method Depreciation expense =

Sum of the  
year digit Depreciation expense =
method

Double  
declining
method Depreciation expense =
×𝟐
 

 
Units of
production Depreciation charge =
method
 I O N
O G N IT
-R E C
DE
When no future benefits expected from use or
disposal----
 Difference between carrying amount and net
disposal proceeds recognised as gain/loss in
profit or loss.
 Gains not classified as revenue.
 Consideration receivable measured at fair
value.
 PRESENTATION & DISCLOSURE
Measurement Basis
 Depreciation Methods
 Useful lives
 Gross carrying amount and accumulated depreciation at beginning and
end of period
 Reconciliation at beginning and end of period showing.
 Comparative information required.

At the revaluation of PPE, the following must be disclosed:-

 Effective date of revaluation
 Independent valuator involvement
 Methods and significant assumptions applied
 Carrying amount should be recognized under cost model
 Revaluation surplus
ACCOUNTING Cost Model
ENTRIES

Purchase of asset Depreciation of Asset

Fixed Asset Dr. Depreciation expense Dr.
Cash/Bank Cr. Accumulated Depreciation Cr.
ACCOUNTING ENTRIES
Revaluation Method

Revaluation Of Fixed
Revaluation of Fixed
Assets(Decrease)
Assets(Increase)
P/L expense/ Revaluation
Fixed Asset Dr.
reserve Dr.
Revaluation reserve Cr.
Fixed Asset Cr.

Accounting for Depreciation

Provision for depreciation (P/L) Dr
Accumulated depreciation (Reserves) Cr.
 ACCOUNTING ENTRIES

EXAMPLE ( X COMPANY)

Land recorded in its books at tk. 13,000.

Its market value was estimated at tk. 15,000.
This decrease was accounted for as an expenses in the p/l statement.
Current year the market value has risen to tk. 20,000.

SOLUTION

Fixed Assets (B/S) tk. 7,000 Dr.

Profit for the year (P/L) tk. 2,000 Cr.
Revaluation surplus (B/S-Equity) tk. 5,000 Cr.