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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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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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Recent amendments

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The following interpretations refer to IAS 16

UK reduced disclosures – FRS 101

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 for FRS 101 preparers

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 for FRS 101 preparers

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

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This page was last updated 30 August 2022.