IAS 16 Property, Plant and Equipment

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.

• Read the unaccompanied version of IAS 16

Which version of the standard?

'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.

* Not UK endorsed as at 21 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 21 June 2021. Read more on EU endorsement of IFRS standards.

The Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs.

For the latest version of the standard, and where the amendments are to be adopted early, refer to IAS 16 2021 Issued Standards.

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 UK endorsed as at 21 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 21 June 2021. Read more on EU endorsement of IFRS standards.

The following interpretations refer to IAS 16

• IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities

  Addresses accounting for a change in a provision that is included in the carrying amount of an item of PPE.

• IFRIC 12 Service Concession Arrangements

  Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

  Addresses the accounting treatment of mine waste materials, which are the materials removed by mining entities in order to gain access to mineral ore deposits.

• SIC 29 Disclosure – Service Concession Arrangements

  Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.

• SIC 32 Intangible Assets – Website Costs

  Addresses accounting for costs associated with the development of a website. 

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, and
• the requirement to disclose proceeds and cost included in profit or loss from the sale of items produced before an item of property, plant and equipment is in the location and condition necessary for it to be able to operate in the manner intended.

IAS 16 paragraph for which exemption is available: 73(e) (comparative period only), 74A(b).  

Other resources

• 2020 IFRS Accounts provides more information on amendment 4

This page was last updated 21 June 2021