IAS 16 Property, Plant and Equipment
International Accounting Standard 16
Overview of IAS 16
- Issued: in 1982; re-issued in 1993 and 2003, followed by amendments
- Effective date: 1 January 2005
- What it does:
- It prescribes the accounting treatment for property, plant and equipment;
- It sets the initial recognition criteria related to an item of property, plant and equipment and deals with subsequent costs;
- It prescribes the rules for initial measurement of property, plant and equipment (components of cost)
- In relation to subsequent measurement, it permits two models:
- Cost model: The asset is carried at its cost less accumulated depreciation and impairment loss.
- Revaluation model: The asset is carried at a revalued amount calculated as fair value at the date of revaluation less subsequent accumulated depreciation and impairment loss.
Articles about IAS 16
- Summary of IAS 16 Property, Plant and Equipment - there is a nice long discussion in the comments below this summary;
- Fully Depreciated Assets Still in Use - what to do? - If you own assets with zero carrying amount, but they are still in use, there's something wrong about it. Learn more in this article.
- How to Account for Free Assets under IFRS - if you ever received a free asset as a gift, here's the guidance on its accounting.
- How to Account for Spare Parts - spare parts are a difficult area and the accounting depends on their character.
- How to Account for Artwork under IFRS - as there's no standard specific for artwork, sometimes it's necessary to develop your own accounting policy.
- What Are Directly Attributable Costs? - what can you capitalize? What can you not capitalize?
- When to Start Depreciation? - If you don't use an asset, but it's available for use, it's the right time. This article explains it all.
- How to Capitalize Borrowing Costs?
- 3 Biggest Myths in Accounting for PPE - did you know that revaluation model is not the same as fair value model?
- Can You Capitalize It as PPE or Not?
Questions and Answers
- Can we capitalize demolition cost and carrying amount of old buildings?
- Should you create a provision for major repairs and overhauling?
- Can you capitalize rental expenses for land?
- Can you capitalize assets placed on customer's premises?
- How to capitalize exchange rate differences as borrowing costs?
- Is a hotel an investment property under IAS 40 or PPE under IAS 16?
- How to deal with the threshold for capitalizing your assets?
- How to determine the fair value of a machine?
- How to account for goods used for testing purposes by the customers?
- Should you capitalize expenses for environmental damage?
- Can you change from revaluation model back to cost model?
- Should we charge depreciation on right-of-use asset related to the land?
- Can we depreciate assets that are disposed off during the reporting period?
- How to account for transfer of an asset from the owner-occupied PPE to the investment property?
- Missing information about long-term property at IFRS adoption – what to do?
- How to account for acquisition of an asset when there is a testing period?
- Can we make a change in depreciation in the middle of the reporting period?
- New window blinds in a leased office - how do you treat the expenses for the leasehold improvements?
- Amendment of IAS 16: How to treat proceeds generated before intended use of the asset (e.g. from sale of items produced when testing the machine)
Other Resources
- IFRS Kit - learn IFRS in 150+ videos, 150+ excel case studies, quizzes, certificates
