Property, Plant and Equipment

Question 1

Accounting Standards

Answer 1

PFRS or PAS, which are based on International Financial Reporting Standards (IFRS), govern the accounting for Property, Plant, and Equipment.

Question 2

Scope of the Applicable Standard

Answer 2

These standards apply to all tangible assets that:
- Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.
- Are expected to be used during more than one period.

Question 3

Tangible items that are:
- Held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.
- Expected to be used during more than one period.

Answer 3

Property, Plant, and Equipment

Question 4

Recognition: Initial and Subsequent

Answer 4

• Initial Recognition: PPE should be recognized as an asset if it is probable that future economic benefits associated with the asset will flow to the entity, and the cost of the asset can be measured reliably.
  
  • Subsequent Recognition: After initial recognition, PPE is carried at cost less accumulated depreciation and impairment losses.

Question 5

Measurement: Initial and Subsequent

Answer 5

• Initial Measurement: PPE is initially measured at cost, including all costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
  
  • Subsequent Measurement: PPE is measured at cost less accumulated depreciation and any accumulated impairment losses.

Question 6

Measurement: Initial and Subsequent

Answer 6

• Initial Measurement: PPE is initially measured at cost, including all costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
  
  • Subsequent Measurement: PPE is measured at cost less accumulated depreciation and any accumulated impairment losses.

Question 7

Journal Entries

Answer 7

• Initial recognition: Debit PPE account, Credit Cash or Accounts Payable.
• Depreciation: Debit Depreciation Expense, Credit Accumulated Depreciation.

Question 8

Presentation

Answer 8

PPE is presented on the balance sheet at its carrying amount, which is cost less accumulated depreciation and any impairment losses.

Question 9

Disclosures typically include:

Answer 9

• The accounting policies adopted for the recognition and measurement of PPE.
  
  • The carrying amount of PPE.
  • Accumulated depreciation and impairment losses.
  • Reconciliation of the carrying amount at the beginning and end of the period.
  • Description and carrying amount of any PPE pledged as security for liabilities.