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PPE stands for Property, Plant and Equipment
IAS-16 permites entities to chose between;
a- fair value model and
b- cost model
Initial measurement as per IAS16;
If assets is purchased than it should be recorded at cost. Cost element is not limited to purchase cost it includes all costs that are necessary to bring the asset to working condition for its intended use.
If the cost is deferred than the same should be recorded at present value.
initially cost and fair value of PPE id same.....these sort of problem arise in seusequent measurment of PPE.its upto company if they wish to use cost model or fair value model...hope that will help
at cost
Cost
Option B. As per IAS16- PPE is iinitally measured at cost.
An item of property, plant and equipment should initially be recorded at cost. [IAS16.15] Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site.
IAS16 (Property Plant and Equipment-Para-15)
Measurement at recognition:
15) An item of property, plant and equipment that qualifies for recognition as an
asset shall be measured at its cost.
Initial measurement as per IAS16;
If assets is purchased than it should be recorded at cost. Cost element is not limited to purchase cost it includes all costs that are necessary to bring the asset to working condition for its intended use.
If the cost is deferred than the same should be recorded at present value.
If an asset is exchanges for another asset than it should be measured at fair value but if transaction lack commercial substance or fair value isn’t available than it should be measured at carrying cost of asset given up.
Measurement at recognition IAS.: An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost.
The answer is Cost (b)
its either on cost model or revaluation model.. read IAS16
هل تحتاج لمساعدة في كتابة سيرة ذاتية تحتوي على الكلمات الدلالية التي يبحث عنها أصحاب العمل؟
