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.
Contents
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- Synopsis (including link to unaccompanied version of IAS 16)
- Related IFRICs
- UK reduced disclosures*
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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
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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 – 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).
Other resources
Factsheets
- 2022 IFRS Accounts
Provides more information about Property, Plant and Equipment: Proceeds before Intended Use
This page was last updated 30 August 2022.