![]() The answer in IAS 16 is taken directly from the Conceptual Framework: the cost of an item of property, plant and equipment shall be recognized as an asset if, and only if: That’s the definition taken right from IAS 16.Īlso, IAS 16 answers our first and basic question: When should we recognize an item of PPE? Are expected to be used during more than 1 period. ![]() Are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and.Property, plant and equipment are tangible items that: What does IAS 16 Property, Plant and Equipment prescribe? Let me give you my answers to the most common ones. ![]() I can confirm it based on a number of e-mail questions I receive in relation to this topic. In 90% of all cases, the answer to the above questions is clear – it’s obvious that buildings, machinery or other BIG pieces of tangible assets presumably used for more than 1 period are PPE.īut I’m convinced that you have come across at least 1 or 2 situations in which you were not so sure about the right conclusion. Or just an expense that goes straight in profit or loss? Is it an item of property, plant and equipment or a part of its cost?
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