Ppe Flashcards
What is an asset
A resource that is controlled by the entity as a result of past events and from which economic benefits are expected to flow
What is Ppe?
Tangible items that are held for the use in production or supply of goods and services, rental or admin purposes and are expected to be used in one or more reporting periods
When is PPE recognised
When it is probable that future economic benefits will flow to the entity and the items cost can be measured reliably
Under what IAS is PPE
Ias 16
What are the costs to be included in statements
Purchase price
Other directly attributable costse.g site prep, testing, professional fees
Estimated costs of dismantle
What are problem areas
Admin and other. Overhead costs- excluded
Self constructed- not profit element
Borrowing costs-where attributable
Subsequent expenditure- excluded unless certain circumstances
Under what IAS is borrowing costs
IAS 23
What is the principe of borrowing costs
Costs that are directly attributable to the construction of a qualifying assets should be capitalised
What is a qualifying asset?
An asset that takes a substantial period of time to get ready for its intended use or sale
What is depreciation
Systematic allocation of the depreciable amount over an assets useful economic life
Straight line method
Diminishing balance method
Units of production
Subsequent expenditure
Routine service and repair- expensed
Replacement of major parts- added to CA as its capital expenditure
How should Disclosure be recognised
Measurement basis Depreciation method Useful life Opening and closing CA Revaluations- date, revaluer and assumptions made
What is the capitalisation rate
The weighted average of the borrowing costs applicable to general borrowings
When are borrowing costs recognised
Expenditure is being incurred on the asset
Borrowing costs are incurred
Activities are in progress that are necessary to prepare the asset for its intended use or sale
