IAS 16 PPE

Question 1

PPE capitalised when critieria of an asset is met

Answer 1

1. Control Resources
2. Probable future economic benefits flowing to the entity
3. Cost measured reliably

Question 2

Amount that can be capitalised in PPE

Answer 2

1. Purchase Price
2. Import duties & non-refundable taxes
3. Cost directly attributable in bringing the assets to its location
   - Installation, Delivery costs, Professional fees
   - Provision for decommisiong costs
   - Borrowing costs

Question 3

Amount that categorised as expense in PPE

Answer 3

1. Advertising and promotional costs
2. Training costs
3. Insurance
4. Maintenance costs

Question 4

Subsequent Expenditure that can be capitalised

Answer 4

1. Modification to extend useful life
2. Upgrading to improve quality
3. Upgrading of components

Question 5

Subsequent Expenditure that cannot be capitalised

Answer 5

1. Maintenance
2. Feasibility study
3. Rectification costs

Question 6

PPE Derecognition

Answer 6

1. Dispose off - gain or loss to PnL
2. Exchange of asset
3. Abandon - No future economic benefit flowing from the enitity.

Question 7

Definition

Answer 7

IAS 16 PPE states that all PPE should be depreciated over the economic useful life of PPE and prorated if Y/E is during the the accouting year.

Question 8

Residual Value?

Answer 8

Shall be revalued at each reporting date and this will affect the depreciation for the year. If residual value increase, the depreciation should reduced and vice versa.