Financial
Reporting
IND AS - 16
1.What is Property,Plant&Equipment? 4. Measurement
Use in prodution of goods or 1. Initial At Cost
Tangible supply of goods or services*
*Expected to
Other than
asset Rental to others* be used for
Ind AS 40
held for more than one Purchase price, Inaugration expenses,
period Directly attributable Relocation expenses
Administrative purposes* expenses ,Cost of staff
training, general &
Purchase price= Invoice price- selling overhead,
Tradedicount+Non-refundable duties & Expenses post ready
If it meets definition
Taxes to use, operating
*Spare parts,Stand of PPE-Ind AS 16
Directly attributable expense losses, cash discount,
by equipment and
Transport cost cost, Abnormal losses
servicing equipment
If it does not meet Handling cost
definition of PPE-Ind AS 2 Installation and Assembly cost
professional fee
Site preparation cost
2 .Ind AS 16 does not cover
Directmaterial, Direct labour
,overhead cost
Ind AS
Property plant & Equipment held for sale Borrowing cost
105
PV of Decommissioning & Site
restoration cost
Biological asset other than bearer plant Ind AS 41
Acquired on Recognise at cash price
deferred equivalent
3.Recognition credit terms Cash price - Total payment
=interest expense
Probable that future economic Cost of item can be Acquired in exchange of non-monetary assets
benefit will flow to entity measured reliably
Space for notes
Exchange transaction Exchange transaction
has commercial lacks commercial
substance substance
1.Fair value of asset Carrying amount
given up of asset given up
2.Fair value of asset
received
3.Carrying amount
of asset given up
*If cash is also paid- Add
*If cash is also received-Deduct
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Financial
Reporting
2.Subsequent 7. Depreciation
Asset is ready or available for intended
Commence
use
Cost model Revaluation model
Asset is classified as held for sale or
Cease
derecognised whichever is earlier
Cost-Acc Depreciation- FV on revaluation date-
Acc Impairment loss Subsequent acc depreciation-
Component accounting
subsequent impairment loss
Subsequent expenditure Component of PPE has significant cost &
different useful life : Depreciate seperately
If Component has significant cost and replaced
Day to day Replacement Major then :
service costs Inspection new carrying amount=carrying amt of PPE on
Charge to replacement date +cost of new part-
profit & loss carrying amt of old part on replacement date
If Recognition criteria
*Satisfied-Capitalise
*Not satisfied-Charge
to profit & loss 8. Decommissioning,Restoration and
Demolition cost
5. Treatment of revaluation surplus/deficit
Upward - Credit If obligation has If obligation has
First
Revaluation Surplus(OCI) been incurred not been incurred
revaluation
Downward - Charge to
profit & loss Capitalize to cost of PPE Do not capitalize treat as
and amt will be estimated cost of disposal on
as per Ind AS 37 derecognition
Subsequent revaluation
Acccounting for change
Previously Upward Previously Downward
Now Upward - Credit Now Upward - Credit to profit &
If measured at cost If measured at
Revaluation Surplus(OCI) loss to the extent of previous
model Revaluation model
Now Downward-Charge to decrease and balance transfer to
Reavaluation surplus to the revaluation surplus
extent available and balance Now Downward-Charge to Profit
Increase in Decrease in Increase in Decrease in
charge to Profit & loss & loss
liability liability liability liability
*When asset is depreciated, transfer proportionate amount from OCT
Add to cost Deduct from Debit to Debit to
to retained earning. cost of PPE revaluation
of PPE revaluation
surplus and surplus and
6. Adjustment of carrying amt due to revaluation balance debit balance debit
to P&L to P&L
Method 1 Method 2
Accumulated dep is Gross carrying amount is
eliminated against restated proportionately
the gross carrying to the change in carrying
amount of asset amount
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