Detailed Analysis: IAS 16 Amendment on Proceeds Before Intended Use

This report provides an analysis of the IASB's Exposure Draft ED/2017/4, which proposes amendments to IAS 16 concerning proceeds before intended use of property, plant, and equipment (PPE). The analysis supports the proposal to prohibit the deduction of proceeds from selling items produced during the preparation of PPE from the cost of the asset. Instead, it suggests recognizing these proceeds and related costs in profit or loss, aligning with IFRS 15 and IAS 2. The report agrees with the decision not to require additional specific disclosures and supports the proposed transitional provisions, deeming full retrospective application's costs outweigh the benefits. The report, written on behalf of RSM International Limited, offers further clarification and contact information for any questions from the Board or its staff.

Mr Hans Hoogervorst
Chairman
International Accounting Standards Board
30 Cannon Street
London EC4M 6XH
United Kingdom
Email: [e-mail]
16 October 2017
Re: Exposure Draft ED/2017/4 – Property, Plant and Equipment—Proceeds before Intended Use
(Proposed amendments to IAS 16)
Dear Mr Hoogervorst
On behalf of RSM International Limited, a worldwide network of independent audit, tax and consulting firms, we
are pleased to comment on the IASB’s Exposure Draft ED/2017/4 Property, Plant and Equipment—Proceeds
before Intended Use (Proposed amendments to IAS 16) (‘the ED’).
We agree with the proposals in the ED prohibiting the deduction from the cost of an item of property, plant and
equipment (PPE) of any proceeds from selling items produced while bringing that item of PPE to the location
and condition necessary for it to be capable of operating in the manner intended by management.
Proposing instead that the entity recognises the proceeds from selling any such items and the cost of producing
those items, in profit of loss in accordance with applicable Standards (eg IFRS 15 Revenue from Contracts with
Customers and IAS 2 Inventories) is, moreover, consistent with the requirements in paragraph 21 of IAS 16 for
incidental operations.
We agree that no specific additional disclosures should be required.
Finally, we support the proposed transitional provisions as we agree with the Board that, in the case of this
proposed amendment, the cost and burden of a full retrospective application would outweigh the benefits.
We would be pleased to respond to any questions the Board or its staff may have about any of our comments.
Please do not hesitate to contact me or Joelle Moughanni at [phone].
Sincerely,
Robert Dohrer
Global Leader - Quality and Risk
RSM International