IAS16 (Property, Plant and Equipment)

Question 1

What is Initial Measurement?

Answer 1

Initial Measurement should be at cost including costs that are attributable to bringing the asset into a working condition.

Question 2

What is Subsequent Expenditure?

Answer 2

Cost should be capitalised if it enhances the economic benefits of the asset in excess of it’s previously assessed standard of performance.

Question 3

How to account for a revaluation?

Answer 3

1. Restate the asset to the revalued amount.
2. Eliminate the accumulated depreciation to date.
3. Establish or update the revaluation reserve.