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Summary PPE IAS 16 R50,00
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Summary PPE IAS 16

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this document is a complete and concise summary on how to do complex PPE questions. It contains many examples with step by step guidance on how to do the calculations

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  • October 6, 2021
  • 15
  • 2021/2022
  • Summary
All documents for this subject (43)
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Talizamazoue
IAS 16 PPE

, Definition & recognition criteria
- Definition:
o Tangible items
o Held for use in:
▪ Production or supply of goods or services
▪ Rental to others or
▪ Administrative purposes
o AND expected to be used for more than one period
- Recognition criteria
o Probable that future economic benefits associate with the item will flow to the entity
o Cost of the item can be measured reliably



Methods of acquisition
1) Separate acquisition
2) Exchange transaction



SEPARATE ACQUISITION IFRS 3 – business EXCHANGE TRANSACTION
combination
AT COST: ➔ Recognized at the Fair 1) Fair value of both available
➔ Purchase price ( AFTER deducting value Cost price of asset RECEIVED =
trade discounts / rebates) ➔ Fair value = initial cost fair value of asset given up
➔ Import duties & other taxes (Non- price UNLESS fair value of new asset is
recoverable) more evident
➔ Any costs directly attributable to (fair value of old)
bring asset to location and
condition necessary for intended 2) No fair value available
use Cost price of asset RECEIVED =
➔ Initial estimate of cost of carrying amount of asset given
dismantling and removing asset up
and restoring site (carrying amount of old)
PPE must be measured at PV
3) No commercial substance
Cost price pf asset RECEIVED =
carrying amount of asset given
up
(carrying amount of old)

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