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Property, Plant and Equipment (IAS 16) - Coggle Diagram

- - - - • Depreciation:
        
        Based on revalued amount, NOT cost
        
        Otherwise same as cost model
      - • Impairment:
        
        Assess for indication of impairment
      - • Revalue (recognise gain in OCI) and depreciate
    - - • Depreciation:
        
        Systematic basis
        
        Residual value
        
        Useful life
        
        Component approach (i.e., depreciate each component separately)
      - • Impairment:
        
        Assess for indication of impairment
      - • Do NOT revalue!
  - - - Cost
    - - Cost measured reliably
      - Probable Future Economic Benefits
- - - - • Held for use in production or supply of goods or services, or
      - • Rental to others, or
      - • For administrative purposes
- - - - – Probable that future economic benefits associated with the item will flow to the entity; AND
      - – The cost can be measured reliably
  - - - Cash price equivalent OR Fair value of consideration given for initial recognition at
        cost:
        
        • Purchase price + import duties + non-refundable taxes – trade discounts – rebates – VAT
        
        • Include any costs to bring PPE to location and condition necessary for it to be capable of operating in the manner intended by management
        
        – E.g., transport, installation, assembly, delivery, etc
        
        • Include dismantling, removing and rehabilitation provisions
        
        – obligation which arises as a result of erecting/installing PPE
        
        • Cash price equivalent (PV) on recognition date – interest unwinds over credit term period (i.e., DISCOUNT TVM)
    - - • Feasibility assessment costs
      - • Costs of opening new facility
      - • Costs of introducing new product or service
      - • Costs of conducting business in new location or with new class of customer
      - • Costs of staff training
      - • Administration and other general overhead costs
      - • Costs incurred in using or redeploying an item
      - • Amounts related to certain incidental operations
      - • Costs incurred while construction is interrupted, unless certain criteria are met
      - • Initial operating losses
- - - - • Configuration of the cash flows of assets exchanged differ (risk, timing and amount); OR
      - • The value of the entity’s operation changes due to the exchange transaction; AND
        
        – The difference is significant relative to the fair value of the assets exchanged
  - - - Cost can be measured reliably
      - Future economic benefits are probable
- - - - residual value (RV)
      - useful life (UL)
      - depreciation method
    - - – therefore not depreciated unless it includes costs of site restoration, then depreciate this
        component over benefit period
    - - – Reviewed and accounted for as a change in estimate under IAS 8
  - - - – The straight line method
      - – The diminishing (reducing) balance method
      - – The units of production method
      - – Sum of the digits method