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IAS 16 - Property, Plant and
Equipment
Definition
tangible assets // held by the entity for use in the production, or
supply of goods or services, for rental to others, or for
administration purposes
...


Recognition
Probable that future economic benefits will flow to the entity
Cost can be measured reliably

Measurement
at cost
IAS 16 - Property, Plant and Equipment

1

Cost included

Cost excluded

purchase price

trade discounts

import duties and non-refundable
purchase taxes

rebates

directly attributable cost to location
and condition
dismantling cost

Initial Recognition
Cost model
Carrying Value = Cost - Accumulated depreciation Accumulated impairment loss
Revaluation model
Carrying Value = Fair Value - Accumulated depreciation Accumulated impairment loss

Frequency of Revaluation ?
1
...
At least 3 or 5 years

Which class ?
Entire
class of
PPE

IAS 16 - Property, Plant and Equipment

Separate classes
Land
Land and buildings

2

Machinery

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Upward Revaluation - Revaluation gain can be recognized in OCI

Downward Revaluation - Revaluation loss can be recognized in SOPL

Depreciation
Definition > Systematic allocation of the depreciable amount of an asset over its
useful life
...


Excess depreciation ?

difference between dep based on the revalued CV of the asset
and based on the original cost
...

Cost of replacing components are required to be capitalized
...

When each major inspection is performed, the cost is recognized as CV of the
item of PPE

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