Property, Plant & Equipment

Question 1

Recognized as PPE if it meets following definition criteria

Answer 1

• it is probable that future economic benefits associated with the item will flow to the entity
• The cost of the item can be measured reliably

Question 2

Initial measurement PPE

Answer 2

measured at its cost
purchase price + Directly attributable costs + Initially estimated costs of dismantling and removing the item

Question 3

Directly attributable costs

Answer 3

cost of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management

Question 4

Not included costs PPE

Answer 4

administration and other general overhead costs, start-up and similar pre-production costs and any abnormal costs

Question 5

acquisition costs

Answer 5

include an estimate of any costs necessary to eventually dismantle and remove the asset and restore its site to the extent that is recognized as a provision unless inventories are produced

Question 6

borrowing costs

Answer 6

costs that an entity incurs in connection with the borrowing of funds

Question 7

qualifying asset

Answer 7

an asset that necessarily takes a substantial period of time to get ready for its intended use or sale

Question 8

Subsequent measurement of PPE

Answer 8

• cost model - measurement at cost less accumulated depreciation and impairment losses
• revaluation model - measurement at fair value determined at regular revaluation dates less any subsequent accumulated depreciations and impairment losses

Question 9

When start depreciation and end

Answer 9

when asset is available for use and ends when asset is derecognized or classified as held for sale

Question 10

Revaluation increase/decrease

Answer 10

• fair value > book value then revaluation increase
• fair value < book value then revaluation decrease

Question 11

Increase revaluation recognition

Answer 11

in OCI

Question 12

Decrease revaluation recognition

Answer 12

in Profit/Loss

Question 13

IAS16 allows the revaluation model to be used if

Answer 13

• the fair value of an item can be measured reliably
• revaluations are made with sufficient regularity to ensure the carrying amount of an item is not materially different from its fair value at the end of the accounting period
• The entire class of PPE to which that asset belongs should be revalued

Question 14

Maintenance and repairs costs recognition

Answer 14

costs are expensed when incurred

Question 15

Improvement and betterments Costs

Answer 15

Perform better than it did initially - costs capitalized and depreciated over the useful life (major inspections are treated like improvements)

Question 16

Derecognition of PPE occasions

Answer 16

• on disposal
• when no future economic benefits are expected