PPE

Question 1

How is PPE recognised?

Answer 1

Should be recognised at cost.

includes:

purchase price
directly attributable costs
estimate of dismantling and site restoration

cost measured as:

cashpaid// payable
fair value if PPE items exchanged

Question 2

What is included in directly attributable costs?

Answer 2

site preperation
delivery
installation
assembly costs
costs of testing
professional fees

Question 3

what is not included in directly attributable costs ?

Answer 3

costs of opening new facility

costs of introducing new products

cost of conducting business in a new location

admin and general overheads

Question 4

How do you account for a revaluation increase using the revaluation model?

Answer 4

debit building cost (to amount revalued)

debit acc depn building (eliminate)

credit OCI/ reval surplus (with increase)
Fv-ca @ date

Question 5

How do you account for a revaluation decrease? (without previous increase)

Answer 5

debit expenses (where related to asset)
credit PPE (CA)

Question 6

How do you account for a revaluation when reversing a previous increase?

Answer 6

Debit reval surplus (to zero if you can)

debit remaining (if any) to p/l expense

credit PPE - decrease value recognised

Question 7

how do you account for a revaluation reversing a previous decrease?

Answer 7

The surplus should firstly be recognised in the p/l to the extent of the previous decrease.

excess is recognised in the OCI

dr asset
cr SPl (reverse prior loss)
cr OCI (excess)

Question 8

how do you account for the Depreciation of revalued assets?

Answer 8

reserved transfer

annual depreciation charge based on new amount less annual depreciation prior is the amount to transfer

debit RS
cedit RE