IND AS 16 – PROPERTY,
PLANT & EQUIPMENT
PRESENTED BY-
MUSKAN SAMAD
MUSKAN FATMA
SAHIL SANDIL
RIYAM AGARWAL
RAJ
SATTWIK
WHAT IS PROPERTY, PLANT & EQUIPMENT
(PPE) ?
Producing goods
• PPE are Tangible items Held for use in Providing services
Rental to others
Expected to be used
during more than a For administration purpose
period
SCOPE
• This Standard shall be applied in accounting for property, plant and equipment except when another Standard
requires or permits a different accounting treatment.
• PPE classified as held for sale in accordance with IND AS 105.
• Biological assets related to agriculture activity other then bearer plant.
OBJECTIVE
• The objective of this Standard is to prescribe the accounting treatment for property, plant and
equipment so that users of the financial statements can discern information about an entity’s
investment in its property, plant and equipment and the changes in such investment.
• The principal issues in accounting for property, plant and equipment are the recognition of the assets,
the determination of their carrying amounts and the depreciation charges and impairment losses to be
recognized in relation to them
PPE IS ACQUIRED BY EXCHANGE OF ASSETS
i. When a PPE is acquired in exchange or part exchange for another assets, the assets received is usually
recorded at fair value.
ii. Can fair value of the assets given or taken is measured reliably ?
• If yes, it recognize at fair value of the assets received whichever is clearly evident.
• If no, it should be measured at cost i.e, carrying amount of assets given up is the cost of assets received
ELEMENT OF COST
• PURCHASES COSTS - Its purchase price, including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates.
• DIRECTLY ATTRIBUTABLE COSTS - Any costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management.
• OTHER COSTS - The initial estimate of the costs of dismantling and removing the item and restoring the
site on which it is located, the obligation for which an entity incurs either when the item is acquired or
as a consequence of having used the item during a particular period for purposes other than to produce
inventories during that period.
SUBSEQUENT MEASUREMENT
There are two Accounting Models :
• COST MODEL
• REVALUATION MODEL
COST MODEL
If this model is chosen PPE should be measured every year
Cost xxx
Less: Accumulated depreciation xx
Less: Accumulated impairment loss xx
Net carrying amount xxx
REVALUATION MODEL
This model should be chosen to the PPE where the fair value can be measured reliably. PPE should be measured at
Fair value of PPE xxx
Less: SUBSEQUENT accumulated depreciation xx
Less: SUBSEQUENT accumulated impairment loss xx
Net carrying amount xxx
DEPRECIATION
i. Depreciation is a systematic allocation of the depreciable amount of an asset over its useful life.
ii. Depreciation of an asset begin when it is available for use i.e, when it is in the location and condition
necessary for it to be capable of operating in the manner intended by management, depreciation ends
when the assets is classified as held for sale as per IND AS 105 or when it is derecognized.
iii. Depreciable amount = Cost – Residual Value
iv. There are 3 methods of depreciation –
• Straight line method
• Diminishing Balance method
• Unit of production method
DERECOGNITION OF PPE
• PPE should be derecognised (removed from PPE) either on disposal or when no future economic
benefits are expected from its use or disposal.
• A gain or loss on disposal is recognised as the difference between the disposal proceeds and the
carrying amount of the asset at the date of disposal.
• This gain or loss is included in the statement of profit or loss – the disposal proceeds should not be
recognised as revenue.
• Where assets are measured using the revaluation model, any remaining balance in the revaluation
surplus relating to the asset disposed of is transferred directly to retained earnings and would be
presented in the statement of changes in equity.
• No recycling (transfer) of this balance into the statement of profit or loss is permitted.
THANK YOU
