IAS16

Question 1

Property, Plant and Equipment are tangible items that are what?

Answer 1

Held for use in production/supply of goods or services
For rental to others
For administrative purposes
Expected to be used in more than accounting period

Question 2

PPE is only recognised as an asset if what?

Answer 2

• Probable that future economic benefits will flow to the entity
• Cost can be measured reliably

Question 3

What should PPE be initially measured at?

Answer 3

Cost

Question 4

How do we deal with any subsequent expenditure?

Answer 4

• Replacement/overhauls should be capitalised if they lead to enhancement in performance
• All other subsequent expenditure is shown as an expense in the SPLOCI-P/L

Question 5

When measuring PPE what are the two models?

Answer 5

1) The cost model

2) The revaluation model

Question 6

What do we do under the cost model?

Answer 6

Carry at cost minus any accumulated depreciation and impairment losses

Question 7

What do we under the revaluation model?

Answer 7

Carry at fair value at date of revaluation less any accumulated depreciation and impairment losses

Question 8

What is the one rule under the revaluation model?

Answer 8

Must revalue ALL assets within the same class