IAS 16 Flashcards
How to calculate cost model?
The asset is carried at cost less accumulated depreciation and impairment
How to calculate revaluation model?
Asset is carried at a revalued amount - subsequent depreciation - impairment
How to calcualte revalued amount
Fair value at the date of revaluation less subsequent depreciation and impairment
Investment property
IAS 40
Assets classified as held for sale
IFRS 5
Biological assets related to agricultural activity
IAS 41
Exploration and evaluation assets
IFRS 6
What is the carrying amount?
Amount at which an asset is recognised in SOPL after deducting any accumulated depreciation and accumulated impairment losses
What is fair value?
The estimated price at which an asset is bought or sold when both the buyer and seller freely agree on a price
What always happens with impairment?
Is deducted from carrying value
What if cost model is used in IAS 16 (depreciation)?
Each part of an item of PPE with a cost that is significant in relation to the total cost of the item is depreciated separately
What does carrying amount include (replacement)?
Cost of replacing the part of such an item when that cost is incurred
When each major inspection is performed?
Its cost is recognised in the carrying amount of the item of PPE as a replacement
What if one item is revalued?
The entire class of assets to which that asset belongs should be revalued
If a revaluation results in an increase in value? (FSs)
Should be credited to OCI and accumulated in equity
A decrease arising as a result of a revaluation?
Recognised as an expense in SPL
When a revalued asset is disposed of? (transfer)
Any revaluation surplus may be transferred directly to retained earnings
When should the depreciation method be reviewed?
At least yearly
When does depreciation begin?
When the asset is available for use and continues until the asset is derecognised
What is the recoverable amount?
Higher of: Asset’s fair value - costs to sell AND value in use
Where is any claim for compensation from third parties for impairment included?
In SPL when the claim becomes receivable
What is value in use?
Refers to the present value of the future cash flows expected to be derived from an asset
What happens with proceeds from selling items?
Recognised in P&L and not deducted from PPE
When should asset be withdrawn?
When it is withdrawn from use and no future economic benefits are expected from its disposal
What is the gain or loss on disposal?
Difference between the proceeds and the carrying amount.
It is recognised in P&L
What non-current assets aren’t depreciated in IAS 16?
Land
Freehold buildings
Investment properties
