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IAS 16 Property, Plant and Equipment

IAS 16 Property, Plant and Equipment sets out the requirements for the recognition of the assets, the determination of their carrying amounts, and the depreciation charges and impairment losses in relation to them. Revised December 2003. Effective 1 January 2008.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

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Financial Reporting Faculty members get full access. Login to get the version of the standard relevant to specific time periods via eIFRS.

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Synopsis

  • Property, plant and equipment (PPE) should be recognised initially at cost. 
  • Cost comprises all directly attributable costs in bringing the asset to the location and condition necessary for normal use. 
  • Subsequently, either the cost or revaluation model may be applied. An entity must apply the same measurement model consistently to each class of PPE.
  • Revaluation surpluses are recognised as other comprehensive income and accumulated in equity
  • Items of PPE must be depreciated on a systematic basis over their useful life
  • On disposal, the difference between the carrying amount of the asset and proceeds received is recognised in profit or loss.

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'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

*Not EU endorsed as at 6 June 2017. Read more on EU Endorsement.

The following interpretations refer to IAS 16

Current proposals

  1. The IASB is engaged in a project to make a narrow-scope amendment to IAS 16 to clarify that where items produced before an item of PPE is available for use, the proceeds of sale may not be deducted from the cost of the PPE. An exposure draft is expected in the first half of 2017.

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore, in order to achieve compliance with the Companies Act and related Regulations, guidance in IAS 16 allowing the carrying amount of property, plant and equipment to be reduced by government grants is deleted.

Disclosure exemptions

FRS 101 paragraph 8(f) states that a qualifying entity is exempt from the requirement to disclose a reconciliation of the carrying amount of property, plant and equipment at the beginning and end of the comparative period. 

IAS 16 paragraph for which exemption is available: 73(e) (comparative period only).

Other resources

Factsheets:

This page was last updated 6 June 2017