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متابعة

How we measure a Plant currently recognized as Non-Current asset held for sale but now want to use it regularly in business?

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تم إضافة السؤال من قبل Muhammad Saeed , Experienced Associate Auditor (Secondment) , Deloitte and Touche (Middle East)
تاريخ النشر: 2015/12/14
Shan Ibrahim
من قبل Shan Ibrahim , Audit Senior , RSMI Avais Hyder Liaquat Nauman Chartered Accountants

After comparing the carrying value of the asset with recoverable amount, record the asset at carrying value if recoverable amount is higher and record the impairment if carrying value is less than recoverable amount.

Basit Shakoor
من قبل Basit Shakoor , Audit Supervisor , WTS Saudi Arabia

a simple plant for sale doesn't meet the criteria of ifrs5 so it will remain in the balance sheet at the value according to the cost model or fair value model.and if the company want to get it reuse the plant just go for it no accounting will be required

Rehan Qureshi
من قبل Rehan Qureshi , Financial Consultant , Self Employeed

IAS

Property, Plant and Equipment

By: Martin Kelly, BSc (Econ) Hons, DIP. Acc, FCA, MBA, MCMI.

Teaching Fellow in Accounting – Queens University Belfast

Examiner: Professional1 Corporate Reporting

This article the accounting treatment of property, plant and equipment will be of interest to

students at the F2 Financial Accounting, P1 Corporate Reporting and P2 Advanced

Corporate Reporting.

Introduction

IAS refers to tangible non-current assets as property, plant and equipment (PPE) and

recognises that they possess a physical substance, are held for use in the production of

goods or delivery of services or for an administrative purpose, and are expected to be used

for more than one accounting period. In practice this definition causes few problems. PPE

includes freehold and leasehold land, buildings and plant and machinery. The objective of

IAS is to prescribe in relation to PPE the accounting treatment for:

The recognition of assets;

The determination of their carrying amounts; and

The depreciation charges and any losses relating to them.

IAS should be followed when accounting for PPE unless another IAS or IFRS requires a

different treatment. A business should recognise an asset when the risks and rewards

associated with the asset pass to the business. The rewards are their custody, use and a

claim on the benefits arising from the assets. The asset is under the control of the business,

the control is as a direct result of a past transaction or event and future economic benefit will

arise. The risks are the costs of repairs and maintenance and any loss arising from the

asset. There should be an expectation that future economic benefits will flow to the owner

and any costs can be measured reliably. This is in line with the definition of an asset as set

out in the IASB Framework for the Preparation and Presentation of Financial Statements.

The cost of PPE can be measured reliably in the case of an acquired asset by the cost of the

market transaction (purchase price). The directly attributable costs of bringing the asset to

the location and the condition for use will include incidental costs of acquisition, such as

import duties, site preparation and professional fees such as architects’ fees. The inclusion

of these costs should cease once substantially all activities necessary to get the asset ready

for use are completed, even if the asset has not yet been brought into use. Costs that would

be excluded include: cost of opening new facility, administration and general overhead costs

and cost of introducing new products. Where, as a result of the acquisition of an item of

PPE, an obligation arises to dismantle it at the end of its useful life and/or to restore the site,

then that obligation must be recorded as a liability at the same time the asset is recognised

(e.g. decommissioning costs associated with nuclear power stations). In the case of a selfconstructed

asset, the cost of the acquired materials, labour and other costs must be

recognised.

It should be noted that legal ownership of an item of PPE is not a requirement, provided

economic benefits arising from the asset flow to the organisation using the asset. For

example, under IAS leases, an item of PPE held under a finance lease is treated as an

asset belonging to the user (lessee).

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