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    IAS 16 and IAS 38 - Analysis 1

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    Lin Aung
    This document provides an overview of accounting standards for non-current assets, including property, plant, and equipment (PPE) and intangible assets. It discusses the definitions and requirements under IAS 16 and IAS 38 for classification, measurement, and disclosure of these long-term assets. Key topics covered include distinguishing PPE from investment property, components of cost, useful lives, depreciation, and impairment testing. The document is intended as a high-level introduction to the accounting standards for non-current assets.

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    IAS 16 and IAS 38 - Analysis 1

    Uploaded by

    Lin Aung
    49 views10 pages
    This document provides an overview of accounting standards for non-current assets, including property, plant, and equipment (PPE) and intangible assets. It discusses the definitions and requirements under IAS 16 and IAS 38 for classification, measurement, and disclosure of these long-term assets. Key topics covered include distinguishing PPE from investment property, components of cost, useful lives, depreciation, and impairment testing. The document is intended as a high-level introduction to the accounting standards for non-current assets.

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    IAS 16 and IAS 38 - analysis 1

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    This document provides an overview of accounting standards for non-current assets, including property, plant, and equipment (PPE) and intangible assets. It discusses the definitions and requirements under IAS 16 and IAS 38 for classification, measurement, and disclosure of these long-term assets. Key topics covered include distinguishing PPE from investment property, components of cost, useful lives, depreciation, and impairment testing. The document is intended as a high-level introduction to the accounting standards for non-current assets.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views10 pages

    IAS 16 and IAS 38 - Analysis 1

    Uploaded by

    Lin Aung
    This document provides an overview of accounting standards for non-current assets, including property, plant, and equipment (PPE) and intangible assets. It discusses the definitions and requirements under IAS 16 and IAS 38 for classification, measurement, and disclosure of these long-term assets. Key topics covered include distinguishing PPE from investment property, components of cost, useful lives, depreciation, and impairment testing. The document is intended as a high-level introduction to the accounting standards for non-current assets.

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    You are on page 1of 10

    www.pwc.

    com

    Non-current assets
    The basic things you
    need to know
    Agenda/Contents

    IAS 16 - Property, plant and equipment

    IAS 38 - Intangible assets

    PwC's Academy July 2016


    PwC Slide 2
    Definitions

    Property, plant &


    equipment Investment property Intangible asset
    Tangible assets that: Property (land or a An identifiable non-
    - are held for use in the building - or part of a monetary asset without
    production or supply of building - or both) held to physical substance
    goods or services, for earn rentals or for capital
    rental to others, or for appreciation or both,
    administrative rather than for:
    purposes; and - use in the production or
    - are expected to be used supply of goods or
    during more than one services or for
    period administrative
    purposes; or
    - sale in the ordinary
    course of business

    PwC's Academy July 2016


    PwC Slide 3
    Land and buildings
    Analysis of a building

    • Assuming that an entity owns a


    building that is:
    - partly held for own-use (eg. a
    floor is used for
    administration purposes), and
    - partly held for rental or
    capital appreciation
    the building must be analysed
    between the element that is PPE,
    and the element that is
    investment property

    PwC's Academy July 2016


    PwC Slide 4
    IAS 16 - Property, plant & equipment

    PwC's Academy July 2016


    PwC Slide 5
    Scope

    • IAS 16 applies in accounting for PPE except when another Standard


    requires or permits a different accounting treatment
    • It does not apply to:
    - property, plant and equipment classified as held for sale (IFRS 5)
    - biological assets related to agricultural activity (IAS 41)
    - the recognition and measurement of exploration and evaluation
    assets (IFRS 6)
    - mineral rights or reserves such as oil and natural gas
    … but does apply to PPE used to develop or maintain the assets
    described above

    PwC's Academy July 2016


    PwC Slide 6
    Definitions
    Cost the amount of cash or cash equivalents paid or the fair value of
    the other consideration given to acquire an asset at the time of
    its acquisition or construction

    Fair value Fair value is the price that would be received to sell an asset or
    paid to transfer a liability in an orderly transaction between
    market participants at the measurement date (IFRS13)

    Carrying the amount at which an asset is recognised after deducting any


    amount accumulated depreciation and accumulated impairment losses

    Depreciation the systematic allocation of the depreciable amount of an asset


    over its useful life
    Impairment the amount by which the carrying amount of an asset exceeds its
    loss recoverable amount

    PwC's Academy July 2016


    PwC Slide 7
    Definitions (continued)

    Depreciable the cost of an asset, or other amount substituted for cost, less its
    amount residual value

    Residual value the estimated amount that an entity would currently obtain from
    disposal of the asset after deducting the estimated costs of
    disposal

    Useful life the period over which an asset is expected to be available for use
    by an entity; or
    the number of production or similar units expected to be
    obtained from the asset by an entity

    Recoverable the higher of an asset’s net selling price and its value in use
    amount

    PwC's Academy July 2016


    PwC Slide 8
    Recognition
    • An asset is defined as:
    - A resource controlled by a company
    - As a result of a past event
    - From which future economic benefits are expected to flow to the
    entity
    • The cost of an item of PPE is recognised as an asset if, and only if:
    - it is probable that future economic benefits associated with the item will
    flow to the entity; and
    - the cost of the item can be measured reliably
    • An entity does not recognise in the carrying amount of an item of PPE the
    costs of the day-to-day servicing of the item
    - rather, these costs are recognised in profit or loss as incurred (as ‘repairs
    and maintenance’)

    PwC's Academy July 2016


    PwC Slide 9
    Measurement at recognition
    Elements of cost

    • An item that qualifies for recognition as an asset shall initially be


    recorded at its cost
    • The cost of an item of property, plant and equipment comprises:
    - its purchase price, including import duties/non-refundable
    purchase taxes, after deducting discounts and rebates
    - any costs directly attributable to bringing the asset to the location
    and condition necessary for it to be capable of operating
    - the initial estimate of the costs of dismantling and removing the
    item and restoring the site on which it is located

    PwC's Academy July 2016


    PwC Slide 10

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