C4 IAS 16 PPE

Question 1

IAS 16 PPE definition?

Answer 1

Tangible assets

1. Held by the entity for use in the production or supply of goods or services, for rental to others, or for admin purposes.
2. Expected to be used during more than one period.

Question 2

IAS 16 Recognition?

Answer 2

1. It is probable that future economic benefits associated with the item will flow to the entity;
2. Cost can be measured reliably.

Question 3

IAS 16 additional guidance for small items

Answer 3

May be classified as consumables and expensed rather then capitalized

Question 4

IAS 16 additional guidance for large and complex assets

Answer 4

Should be broken down into composite parts and each depreciated separately.
Expenditure to renew can be capitalized

Question 5

IAS 16 measurement at recognition

Answer 5

Purchase price less trade discount/ rebate
+
Direct costs of bringing the asset to working condition for intended use
+
Finance cost

P62

Question 6

Measurement after recognition

1. Cost
2. Revaluation

Answer 6

Year end.

1. Cost: carry asset at cost less depreciation and any accumulated impairment losses
2. Reva: carry asset at reva amount, FV less subsequent accumulated depreciation and any accumulated impairment losses

Question 7

Things to do If the revaluation model is applied

Answer 7

1. Regularly revalued;
2. Using FV hierarchy in IFRS13
3. Whole class
4. Surplus credit to OCI
5. Losses is an expense in PL after cancelling a previous reva surplus.

Question 8

Depreciation

Answer 8

Page 62

Question 9

Derecognition

Answer 9

Disposal or no future eco benefits

1. Gains or losses are calculated by comparing Net Proceeds with Carrying Amount = Income/expense in PL
2. A reva asset, should transfer the reva surplus to Retained earnings

Question 10

Exchanges of assets

Answer 10

Measure at FV, unless no commercial substance

Or can’t be measure reliably