Revisiting IAS 16, Property, Plant & Equipment

Continuing Learning Series

This article is a part of ACS Continuing Learning Series, which is a series of short articles, published by ACS Consulting at short regular intervals on a variety of subjects related to strategy, corporate finance, financial planning & analysis, business planning and performance management.

Subject: Financial Reporting

Relevance:

• All accountants and accounting students.

• Senior Reporting Personnel, CFOs & Auditors

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Introduction

IAS 16 Property, Plant and Equipment provides an outline and guidelines on the accounting treatment for most types of property, plant and equipment or PP&E. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life.

IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.

Objective & Scope of IAS 16?

Objective: The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. The principal issues are: