Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 11

PROPERTY, PLANT AND EQUIPMENT (IAS 16)

1. OBJECTIVE

1.1 This Standard sets out requirements for the recognition and measurement of property, plant and equipment and also prescribes the financial statement disclosure requirements.

1.2 This Standard does not apply to

• Property, plant and equipment classified as held for sale under International Financial Reporting Standards (IFRS) 5, Noncurrent Assets Held for Sale and Discontinued Operations
• Biological assets related to agricultural activity (see International Accounting Standards [IAS] 41, Agriculture)
• Recognition and measurement of exploration and evaluation assets (see IFRS 6, Exploration for and Evaluation of Mineral Resources)
• Mineral rights and mineral reserves, such as oil, natural gas, and nonrenewable resources

2. SYNOPSIS OF THE STANDARD

This Standard helps users of financial statements to assess information about an entity’s investment in its property, plant and equipment and the changes in that investment.

2.1 The items of property, plant and equipment should be recognized when

• It is probable that the future economic benefits associated with the asset will flow to the entity; and
• Its cost can be measured reliably.

2.2. In the case of items that have individually insignificant value but will qualify as assets under the two basic recognition criteria just listed, this Standard permits the aggregation of such individually insignificant value items, provided they are similar in nature. An example of this is ...