IAS 16 Flashcards
Identification of IAS 16 assets
- tangible assets
-held fer use in production or supply of goods panel services - for rental to others or
- admin purposes
- held for more Than one year
Recognition criteria
- it is probable that future economic benefits associated with the item will flow to the entity, and
2.The cost of the item can be measured reliably.
Measurement
Initial measurement: Ias 16 assets are measured at purchase price plus any costs directly attributable that are necessary to bring the asset to the location and condition necessary for it to operate as intended by management.
Subsequent measurement: Ias 16 assets after recognition are measured according to the cost model or the revaluation model
OBJECTIVE
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Accounting treatment of an entity’s property, plant and equipment (PPE)
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Recognition of PPE, determining the carrying amounts, determining the depreciation expense and impairment losses.
SCOPE
Applied for accounting for PPE EXCEPT when another standards permits or requires otherwise
Eg. Assets held for sale (IFRS 5).
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Note that IAS 16 also applies to Investment Property carried on the cost model
Exchange of non-monetary items
- Measure at the FV of . the given up asset
- Measure at FV of the acquired if it is more reliable and transaction has commercial substance
- Measure at the carrying amount of given up FV of both is not measurable and / or has no commercial substance
Commercial substance
- Risk, timing and amount of cash flows of assets received differs from asset given up
OR
2.entity specific value of the portion of the entity’s operations affected by the transaction changes
AND - The difference in above is significant relative to the fair value of assets exchanged.
Cost and revaluation models
Cost model - cost less accumulated depreciation and accumulated impairment losses
Revaluation model - fair value at date of revaluation less subsequent accumulated depreciation and accumulated impairment losses
