1. Welcome
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2. Course Instructor
Ms. Shahreen Sonia
Lecturer, Advanced Accounting
Department of Business Administration (DBA)
Green University of Bangladesh (GUB)
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3. Name ID
Md. Moazzem Hossain 110106034
Md. Anqur Chowdhury 110106027
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4. Presentation Topics
Serial No. Name of Topic Slide No.
01 OVERVIEW 5
02 DEFINITION 6, 7, 8 & 9
03 RECOGNITION 10
04 INITIAL MEASUREMENT 11
05 MEASUREMENT SUBSEQUENT TO INITIAL RECOGNITION 12
06 RECOVERABILITY OF THE CARRYING AMOUNT 13
08 DISCLOSURE 14, 15, 16 & 17
09 ANY QUESTION & THANK YOU SLIDE 18 & 19
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5. Overview
IAS 16 Property, Plant and Equipment
outlines the accounting treatment for most
types of property, plant and equipment.
Property, plant and equipment is initially
measured at its cost, subsequently measured
either using a cost or revaluation model, or
depreciated so that its depreciable amount is
allocated on a systematic basis over its useful
life.
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6. DEFINITION
Property, plant and equipment are tangible items that:
– are held for use in the production or supply of
goods or services, for rental to others, or for
administrative purposes; and
– are expected to be used during more than one
period.
Useful life is:
– the period over which an asset is expected to be
available for use by an entity; or
– the number of production or similar units expected
to be obtained from the asset by an entity.
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7. DEFINITION (Contd.)
• Carrying amount is the amount at which an
asset is recognised after deducting any
accumulated depreciation and accumulated
impairment losses.
• Cost is the amount of cash or cash
equivalents paid or the fair value of the other
consideration given to acquire an asset at the
time of its acquisition or construction.
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8. DEFINITION (Contd.)
• Depreciable amount is the cost of an asset, or
other amount substituted for cost, less its residual
value.
• Depreciation is the systematic allocation of the
depreciable amount of an asset over its useful life.
• Fair value is the amount for which an asset could
be exchanged between knowledgeable, willing
parties in an arm’s length transaction.
• An impairment loss is the amount by which the
carrying amount of an asset exceeds its
recoverable amount.
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9. DEFINITION (Contd.)
• Recoverable amount is the higher of an
asset’s net selling price and its value in use.
• The residual value of an asset is the estimated
amount that an entity would currently obtain
from disposal of the asset, after deducting the
estimated costs of disposal, if the asset were
already of the age and in the condition
expected at the end of its useful life.
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10. RECOGNITION
Items of property, plant, and equipment
should be recognized as assets when it
is probable that:
• It is probable that the future economic
benefits associated with the asset will
flow to the entity, and
• The cost of the asset can be measured
reliably.
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11. INITIAL MEASUREMENT
If payment for an item of property, plant, and
equipment is deferred, interest at a market rate
must be recognized or imputed.
• The exchange transaction lacks commercial
substance or
• The fair value of neither the asset received nor
the asset given up is reliably measurable. If the
acquired item is not measured at fair value, its
cost is measured at the carrying amount of the
asset given up.
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12. MEASUREMENT SUBSEQUENT TO
INITIAL RECOGNITION
• Cost model. The asset is carried at cost less
accumulated depreciation and impairment.
• Revaluation model. The asset is carried at a
revalued amount, being its fair value at the
date of revaluation less subsequent
depreciation and impairment, provided that
fair value can be measured reliably.
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13. RECOVERABILITY OF THE
CARRYING AMOUNT
IAS 16 Property, Plant and Equipment
requires impairment testing and, if necessary,
recognition for property, plant, and
equipment. An item of property, plant, or
equipment shall not be carried at more than
recoverable amount. Recoverable amount is
the higher of an asset's fair value less costs to
sell and its value in use.
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14. DISCLOSURE
1. Information about each class of
property, plant and equipment.
2. Additional disclosures.
3. Revalued property, plant and equipment.
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15. DISCLOSURE (Contd.)
1. Information about each class of property, plant
and equipment.
For each class of property, plant, and
equipment disclose:
basis for measuring carrying amount.
depreciation method(s) used.
useful lives or depreciation rates.
gross carrying amount and accumulated
depreciation and impairment losses.
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16. DISCLOSURE (Contd.)
2. Additional disclosures.
The following disclosures are also required:
Restrictions on title and items pledged as security
for liabilities
Expenditures to construct property, plant, and
equipment during the period
Contractual commitments to acquire property,
plant, and equipment
Compensation from third parties for items of
property, plant, and equipment that were
impaired, lost or given up that is included in
profit or loss.
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17. DISCLOSURE (Contd.)
3. Revalued property, plant and equipment.
If property, plant, and equipment are stated at
revalued amounts, certain additional disclosures
are required:
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 recognized 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 shareholders.
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18. Any Question???
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19. Thank You…
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