Accounting For Plant Assets Pdf Download

As we have noted already, the expense that results from the consumption or exhaustion of natural resources is called depletion+ Difference paid (boot)The cost of the asset is divided by the estimated outputThese costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service itThe units-of-production method[close] units-of-production method uses an estimate of the output of an assetIf an asset is sold for more than its book value, there is a gain; if an asset is sold for less than its book value, there is a loss; and if an asset is sold for exactly book value, there is no gain or lossA patent, for example, has a maximum legal life of 20 years[IAS 16.51] The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity [IAS 16.60]; a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriateThe residual value and the useful life of an asset should be reviewed at least at each financial year-end and, if expectations differ from previous estimates, any change is accounted for prospectively as a change in estimate under IAS 8

[IAS 16.13] Also, continued operation of an item of property, plant, and equipment (for example, an aircraft) may require regular major inspections for faults regardless of whether parts of the item are replacedwhere C = cost of the asset, S = estimated salvage value of the asset, and L = estimated useful life of the asset[IAS 16.5] The standard does apply to bearer plants but it does not apply to the produce on bearer plantsA depreciation expense account is temporary and is thus closed to the Income Summary accountThe carrying amount of those parts that are replaced is derecognised in accordance with the derecognition provisions of IAS 16.67-72

Any claim for compensation from third parties for impairment is included in profit or loss when the claim becomes receivableAn accumulated depreciation account, on the other hand, is a permanent account and will remain open to accumulate depreciation charges over the life of the related plant assetA capital expenditure[close] capital expenditure adds value to an asset or extends its lifeHistory of IAS 16 Date Development Comments August1980 Exposure Draft E18 Accounting for Property, Plant and Equipment in the Context of the Historical Cost System published March1982 IAS 16 Accounting for Property, Plant and Equipment issued Operative for financial statements covering periods beginning on or after 1 January 1983 1January1992 Exposure Draft E43 Property, Plant and Equipment published December1993 IAS 16 Property, Plant and Equipment issued (revised as part of the 'Comparability of Financial Statements' project) Operative for financial statements covering periods beginning on or after 1 January 1995 April and July 1998 Amended to be consistent with IAS 22, IAS 36 and IAS 37 Operative for annual financial statements covering periods beginning on or after 1 July 1999 18December2003 IAS 16 Property, Plant and Equipment issued Effective for annual periods beginning on or after 1 January 2005 22May2008 Amended by Improvements to IFRSs (routine sales of assets held for rental) Effective for annual periods beginning on or after 1 January 2009 17May2012 Amended by Annual Improvements 2009-2011 Cycle (classification of servicing equipment) Effective for annual periods beginning on or after 1 January 2013 12December2013 Amended by Annual Improvements to IFRSs 20102012 Cycle (proportionate restatement of accumulated depreciation under the revaluation method) Effective for annual periods beginning on or after 1 July 2014 12 May 2014 Amended by Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) Effective for annual periods beginning on or after 1 January 2016 30 June 2014 Amended by Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) Effective for annual periods beginning on or after 1 January 2016 Related Interpretations IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine SIC-6 Costs of Modifying Existing SoftwareThe accelerated method of depreciation[close] accelerated method of depreciation is appropriate for assets whose productivity is greater during the earlier years or in cases where technology will probably make an asset inadequate before its physical life is over

Other terms used to describe plant assets include long-term assets, fixed assets, capital assets, and property, plant, and equipmentAnd the process of allocating the cost of a natural resource over its expected useful life is called depletion[close] depletion The Land Improvements account[close] Land Improvements account is a specific type of plant assetThe double declining-balance method[close] double declining-balance method results in greater depreciation being charged during the earlier years of a plant asset's life and less depreciation as the asset agesExamples of plant assets include buildings, land, furniture, equipment, and machinery

Plant assets are assets that (1) have a useful life of more than one year, (2) are acquired for use in the operation of the business, (3) are not intended for resale to customers in the normal course of business, and (4) are tangible (you can touch them)[IAS 16.79] Revalued property, plant and equipment If property, plant, and equipment is stated at revalued amounts, certain additional disclosures are required: [IAS 16.77] the effective date of the revaluation whether an independent valuer was involved for each revalued class of property, the carrying amount that would have been recognised had the assets been carried under the cost model the revaluation surplus, including changes during the period and any restrictions on the distribution of the balance to shareholdersWhen an asset is no longer useful, it should be sold, traded, or discardedUpdating depreciation involves recording the depreciation expense for the time between the date on which depreciation was last recorded and the disposal dateThis recognition principle is applied to all property, plant, and equipment costs at the time they are incurredThe carrying amount of an item of property, plant, and equipment will include the cost of replacing the part of such an item when that cost is incurred if the recognition criteria (future benefits and measurement reliability) are metBy using this site you agree to our use of cookies[IAS 16.61] Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an assetSIC-14 Property, Plant and Equipment Compensation for the Impairment or Loss of Items ae94280627

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