IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

IPSAS 17: Property, Plant and Equipment

Objective

The objective of IPSAS 17 is to prescribe the accounting treatment for property, plant and equipment so that users of financial statements can discern information about an entity's investment in its property, plant and equipment and any changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognized in relation to them.

The IFRS on which the IPSAS is based

IAS 16, Property, Plant and Equipment

Content

Principal definitions

Property, plant and equipment are tangible items that (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and (b) are expected to be used during more than one reporting period.

Recognition

According to IPSAS 17.14, the cost of an item of property, plant and equipment is recognized as an asset if, and only if:

a) It is probable that the future economic benefits or service potential associated with the item will flow to the entity.

b) The cost or fair value of the item can be measured reliably.

IPSAS 17 does not prescribe the unit of measure for recognition, i.e., what constitutes an item of property, plant and equipment. Thus, judgment is required in applying the recognition criteria to an entity's specific circumstances. It may be appropriate to aggregate individually ...