7. IAS 16: Property, Plant and Equipment

Question 1

What are the conditions for recognition of a tangible non-current asset?

Answer 1

• It is probable that future benefits will flow from the asset to the enterprise
• The cost of the asset can be measured reliably

Question 2

Over what period is depreciation charged?

Answer 2

The useful life of the asset.

Question 3

What happens to an upward and downward revaluation?

Answer 3

• Upwards is credited to a revaluation reserve
• Downward is charged as an expense in the SoPL

Question 4

What happens when one asset in a class is revalued?

Answer 4

All assets in that class must also be revalued.

Question 5

What should be disclosed in the financial statements regarding non-current assets?

Answer 5

• Methods of depreciation used
• Cost of each asset heading + related accumulated depreciation at the beginning and end of the period
• A reconciliation of the net book value at the beginning and end of the period, including: additions, disposals, revaluations, and depreciation.