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Accounting for Property, Plant & Equipment

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Added on  2021-04-16

Accounting for Property, Plant & Equipment

   Added on 2021-04-16

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Accounting for Property, Plant & Equipment
Accounting for Property, Plant & Equipment_1
The following conditions are to be satisfied for recognition of any cost spent on PPE as asset (AASB 116, para.7)◦Probable future economic benefits arising from the PPE◦Reliable measurement of the costIncludes assets which do not directly contribute in any future economic benefits to the controlling entity (AASB 116, para.11)Recognition
Accounting for Property, Plant & Equipment_2
Carrying amount of consumable and other PPE required for continuous servicing would not be recognised under PPE but rather as expenses under “Repair & Maintenance” (AASB 116, para.12)For frequently replaced or inspected parts, derecognition of replaced parts and previous inspections must be done (AASB 116, para.13,14)Recognition (Contd..)
Accounting for Property, Plant & Equipment_3
A PPE recognised as asset is to be measured at cost (AASB 116, para.15)For not-for-profit entities, asset may be acquired for free and hence the fair value is to be considered (AASB 116, para.15.1)Elements of Cost (AASB 116, para.16)◦Purchase Price◦Direct costs associated with transporting and installing the asset◦Site restoration (including previous item removal)Measurement (Acquired Assets)
Accounting for Property, Plant & Equipment_4

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