Chapter 10: Property, Plant & Equipment Flashcards
These are tangible assets held for use in the production or supply of goods, services or program outputs, for rental to others, or for administrative purposes, and NOT INTENDED FOR RESALE.
Property, Plant and Equipment
When is a PPE RECOGNIZED?
- If it meets the definition of the PPE.
- If it is more than the capitalization threshold of Php15,000.
This is the minimum cost an item should have before it is capitalized as PPE.
Php15,000 capitalization threshold.
Items below the capitalization threshold are recognized as:
Inventories
Initial Measurement of PPE
Cost
The initial cost of PPE comprises the:
- Purchase Price
- Direct Costs
- PV of Decommissioning and Restoration Costs
This includes import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
Purchase Price
This pertains to the costs of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Direct Costs
These refer to the costs of restoring the site where the PPE was previously installed.
Restoration Costs
These costs refer to the costs of dismantling or uninstalling a PPE at the end of its useful life.
Decommissioning Costs
The PV of Decommissioning and Restoration Costs is recognized as:
Other Provisions
The provision for dismantling costs is SUBSEQUENTLY measured at:
Amortized Cost
Modes of PPE Acquisition:
- By purchase.
- By construction.
- Through exchange.
- Through non-exchange.
- Through intra-agency or inter-agency transfers.
- Through finance lease.
Are cash discounts EXCLUDED from the initial measurement WHETHER TAKEN OR NOT?
Yessir!
A cash discount not taken is recognized as:
Other Losses
