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It is the systematic allocation of the depreciable amount of an asset over its related useful life. In such circumstances, the entity will recognize the cost of replacement in. The initial revaluation #(\$U>GT:%TdmDb]VdlcS& a\lE~V[#G[G ~ .Op ! International Critique of the IAS16 Prescription Application and Treatment ifrs 16 illustrative examples - IFRS MEANING Otherwise, we would be talking about property, plants, and equipment. (k) Carrying values of the assets which are idle. Explain how the disposal should be accounted for in the financial statements. It is the period of time or number of production units for which asset will be used by the management. EXAMPLE 8 Ias 16 Practice Qns - Ias 16 Property Plant and Equipment However, the entity uses the cost model for the subsequent measurement of this asset and uses IAS 16 instead of IAS 40. Paragraph IAS 16.17 provides examples of directly attributable costs that can be included in the cost of PP&E. Note that directly attributable costs do not need to be incremental. (c) Revaluation should be performed regularly enough, so that the carrying value of asset should not be materially different from its revalued amount. 1132 0 obj If either changes significantly, the change should be accounted for over the useful life remaining. Required Paragraph 16(b) of IAS 16 states that the cost of an item of property, plant and equipment (PPE) includes costs directly attributable to bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management1. Once entered, they are only If necessary, the estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed. DrRevaluation surplus Statement of profit or loss and other comprehensive income. Property, plant and equipment may be requiring the replacement of some component parts during the useful life (such as the spare parts of a plant or walls of a building). 1123 0 obj IAS 16 applies to the accounting for property, plant and equipment, except where another standard requires or permits differing accounting treatments, for example: The standard does apply to property, plant, and equipment used to develop or maintain the last three categories of assets.