Ind As 16 Property Plant and Equipment

ReplacementParts majorInspection
i PPE Tangible items
if PPE parts are replaced they Carrying amount
ofnewpoets iscapitalised ifdefinitionis met And
Held for use in prod7 Mental Administrative Candying Amountof old parts is derecognised
am supply
ofgoods services Purpose if cA ofold parts is notdeterminablethenReplaceme
costofnewparts istaken afteradjusting timevalue
And Expected to usefor more than one period ofmoney and depaiciation
sameconcept for major Inspection
bothconditions
Cost
of PPE recognised an Asset
a Future Economic Benefits
if
met costof self constructed assets
6 cost measured reliably
lost determined usingsame principles as for an
acquired assets
1 BEARER PLANTS Internal profits are eliminated
Living Plants ii Abnormal wasted material labour and other
a used inPrada supply of agriculture produce resources not included
b more than one period til Interest otherBorrowing lostcapitalised it Ind
e Remote likelihood of being sold as agriculture As23 Satisfies
produce Exceptscrapsales sameconceptforselfconst of BearerPlants

Cost
ofPPEthat are not included
a Initiallylostmodel it costof conducting business inNew location on
in Measurement at Recognition b subsequently either with NEW CLASS of CUSTOMER
costmodel on
Revaluation model
in staff training
in Introducing new product or services
costof PPE includes iv opening new facility
Administrative overhead
Purchaseprice t Importduties f No Refundable pay 4
4 GENERAL overhead
t Directly attributable cost tobring Asaf to location and
condition Employee Benefitcost Professional bees installation
CESSATION OF CAPITALISATION
Estimated Memory
tis'mmadnthing
andrestorationcost r n capitalisation ceases when item is in thelocationand
1 I Trade discounts rebates condition andcapable
ofoperating inthemanner as
required by management
in spare pants standbyEquipment servicing equipment notincluded
Following lost are
Recognised as PPE
if definition ofPRE is met Else a costincurred but item iscapableofoperating Butit
recognised as inventory isnot yet broughtinto use on notoperating at
buy capacity
v1 Repairs maintenance y Initial operating
losses

Day to Day servicing costrecognised in Pll operations

y lostofRelocation onReorganisingentity's
 MEASUREMENT OFCOST Revaluation tobemadeforentireclass
e PaymentDefeated beyond normal creditterms if an item of PPE isrevalued thenentireclass of
costof PPE is CASH PRICE EQUIVALENT PRE to which thatAssetbelong shallberevalued

If payment is deferred then Difference bet CathPrice

recognised as interest
equivalentandtotal payment
such interest canbe capitalised as perIndAs23

ii Exchange of Assets Frequency of Revaluation

items
maybeacquiredinexchangefor non monetary on Depends upon changes in Fairvalue
combination non monetary assets
of monetary oh an Annual Revaluation
costalways measured at fairvalue ofassetsgiven up Insignificantchange 3 5 years
unless fair rate ofassets acquired ismore evident
deny
1Stpriority 7 Givenup 2ndpriority acquired Revaluation Technique
commercial substance or fairvalueof Lost 100000 AceDep 55000 Fairvalue 6500
If thereis no
bothassets givenup assetsacquired determinable not
then carrying Amount ofAsset given up is taken AceDep 55000
they 100000 q pp 5500

MEASUREMENT
INITIALRECOGNITION
AT SUBSEQUENT RECOGNITION C ACCDep 7 55000
CA 45000 2 PPE
TOFair valueGain sooo
Eithercostmodelon Reval'smodel oct
only costmodel
lostmodel 7 Cost AceDept AceImp
CostPrice i e cashprice loss Tech 2
Equivalent on Exchange Reval model Carrying Amount Subs cost100000Cool
145595 55 init
ofAsset Concept AccDept subs Imploss and then Dep 55000
Ace 557 79444 551 29444
Adjust Fairvaluechanges CA 45000 457 65000 451 20000
fair valueGain A OCI
Fairvalue loss 7 PIL PPE All Dr 44444
To AceDep 24444
70F v Gain oci 20000
PRE Acquired for safety on Environmental Reasons

NotDirectly increasing FEB butnecessary toobtain

FEB from its otherAssets
chemical
Eg Achemical manufacturermayinstall new
handling processes to comply with environmentalrequirements
60mProd and storage
ofdangerous chemicals
Incidental operations
ample cost asset750000
of life sums Reval model
Incidental operations onduding
may occur before
W 311312025 thelast on developmentactivities Example Income
311171.56000 31131,7ooo sis 31131.1 1 lathed through usingbuilding site as car parkuntill
const's Staats
coquised 50000
I 50000 10000crepe
56000
smoooDept c
3
nep e creepy 1 these Income Expenses recognised in Pll
40000 42000 N
t 16000 FvGain e 7000 Fvcoss c e.v.ws again
04 3.5000 100 0 sooo
56000
16000recognised 7000adjusted with sooocreditedis
9000aimed
inoci withour
Yang anas
subsincrease
Eia
ANOTHER EXAMPLE DISCUSSED BELOW
 DEPRIVATION
method
ofDepriciation
Depriciable Amount Anasset allocated on a systematic theDen method shallreflectPATTERN inwhichAsset
of FEB expected to consume
BASIS over its USEFUL LIFE
Deporiciation recognised in Pll unless capitalised in cA Dept method reviewed atleast ateach FyEnd ifmemo
ischanged thensuchchafe considered as change in
of Another Asset
accounting estimate and accounted prospectively
land Building are separable assetandaccounted
separately Also land has an unlimited useful life and methods
of Dept 7
Therefore not depreciated exceptquarriesand sites a straight line method 9unitsof Prod method
used for landfill 5 DiminishingBalancemethod ifnoprod thenDeptmaybeZen
Depreciation Based on Revenue is not appropriate
RESIDUAL VALUE useful life Should bereviewed
atleast at each financial year end and such change
Demecognition
considered as change in Accounting Estimates and
accounted prospectively PPE should bederecogaised I a on disposal

E9 CA of Asset I 10000 5 NonFEB

Residualvalve 10000 or more cognition included in Pll
Gainfusson dere
Then No Depariciation will be changed Gainloss CA ofPPEDerecoquised netsaleproceeds
Dateof Disposal DatetheRecipientobtainscontrol
EI Litigating y toooo life ryas
Residual valve 6000 Fairvalve 15000
Decommissioning Restoration and similarliabilities
lostmodel Revaluation model
CA 10000 CA 10000 Recognised as partofcostof PPE or RouAsset
e Dep Dept Recognised
as liability as peringas 37
2000 Gooo
1
1000
4000 1 900
Two different approach for changes in Decomm tab
CA 8000 CA 8000
Costmodel
C F v Gain 7000 oct 11Changes inDecommhab ADDEDDEDUCTED fromCost
15000 ofAsset
RCA in if decrease in habexceed cA thenexcessrecognised
in Pll
Commencement
of Depreciation Example CA atAsset 10000 Provforliab20000
Depriciation begins when it is available for use liability decrease by 15000
i e when capitalisation ceases when it is in
the location and condition andcapable of operating Pll 50009 ca ofAsset7 100001
in the manned as deserted by management prov for tiab 15,8
1 coooot

of Depriciation
Cessation
Earlier of Asset classified asheld for sale Indasios if changes in his results in Increase tocostof
iii
Asset then check if there isindication
AssetDerecognised Disposal no FEB ofImpairment
Deptdo notcease whenasset become idle or retired from EE CA ofAsset 10000 Decomm hab 15000
m increase in Decomm hab 4000
B's
Asset 10000
Decomm lian 15000 Inc
Inc 4000 44
19000

since CAof Asset increases checkindication

ofImpairment
 Example
2 Revaluation model same concept of surplus Deficit
AnEntity PurchasedMachinery oncreditInstallment
a Any increase in liability is adjusted in Pll However to to be paid E 125000every yearfor a years
the extent of creditBalance in Oct octis adjusted useful life 3years Cashprice 400000
5 Any decrease in liability is adjusted in OCI Howeverif Dismantling651after
Yeah 30000 Discountrate
Previously changed in Plcthen tosuchextent it will be
credited in Pk
gym
ist and ad
125000 125000
in I
c it decrease en liability exceeds CAofAsset suchexcess 125000 125000
recognised in Pll

d Anychange in liability would requireasset to be testedfor

impairment
Point i and I EIR 1
Bsheet TOCalaEIR
Chen g 500007
PIL 150007
At 10 396233
Pk 5000 Assets soooo pp.lu gyro
ock 3000 apronyou 10000 sat 9 37 89
9
Decomm
60000
Prov 10000 whenvalve P 8730 Interest nate to 19
Inc 5000 M t a t
Decrease 8000 gyro
i i M i n a N 1730 3767
9
0.4315
BSheet Point iii
pl Excel 1000 CA of Meet 7 5000 EIR 104 0.4315 9.5685
OCI 5000
Dv ofDismantling 3099.9033 22540
Prov 8000
Decreed 6000 131Sheet
2000 Plypep IStyr 140846 PPElothyr 400000
Dismantling 22540
other 422540
C IStyrDept
4422540134m
4408467
Journal Enemies Payable 400000 281694
Other PPE Mnt 9.568540 38274 512damDep 40847
To parables O a Payment 1250007
god Dept 1408477
70 Prov forDismantling zygo a 313274 nie
1514 29975
Interest Exp Pll Dr38279
1250007
TOParables zzz
Payahles N 125000 218249
yo 20883
Finance WITH Dr 2254 425000
To Provfor Dismantling 254 114132
Dept Pll 08 109010868 toRoundoff
To PPE phogy 1250007

52 IGNORE
 MY Interest Exp Pll
TOPayables
Dr 29975
agg
Prov
forDismantling
other
22540

Payahly N 125000
Hat lot All 2254
yaw 125000
Finance lost Pll Dr 2479 at lotPK 2479.4
To ProvforDismantling 2979 94 107 Dk 2727.3
th 30000
Dept 190847140847
p

3rdyr Interest Exp Pll Dr 20883

TOParables noggy
ugliest parables
To Barn pyooo
Finance cost Pll Dr 2727 chapterclosed
To ProvforDismantling 2727 inpdyrand
Dept Pll 0847140897 Chepten closed
To PPE inIndyend
Prov for Dismantling Dr30000 gcepten
closed
To Burn yoooo in 3294rad

Uther interest Exp A 10868

ToPayable 10868

Parables Dr 115000
ToBonn 125000

Elands loafofppg nooooo Revaluation model

life ay years is followed subsequently

Fairvalues
Atthetime ofpurchase groove
a Msheet Cash a 400000
1styr Eng 2360000
2ndyr beg PRE 400000
z NoReval
32dg Eef 150000 OCICRR 60000 Dep 10000077PIC
hthy Eg 2 NoReval 30000 300000
BRy 90000 B Gain 600005042
360000
Dep 100000 AttheEnd 1099590000
fadep op
100000 will be marsfenned app poooggple
290000
forreal PPE 60000 to Pll RetiredCanines
ToBR Oct goooo pepo goooo pie
contransfen
Oy gaming youbemasleaned
atthe 009768009 30000 120000
Rain
time Disposal on
of
prop every yearas
condsobeproportionately
transferred to Retained pygg
Perentity's Alepolicy
corningsyevenyyear hep 450117
act Xxx
Earning
B xxx
Examples Revaluation
surplus or Revaluation Deficit

Other 100000 Cost of PPE

g PPE 100000
1styr
7 150000 finale Bhaply 0450000 50000

Ddt 7 80000 n 150000

C BDeficit ou
500007
32dm 7 190000 a toooo
Pk 0007
80000
ythyn 9 30000
qq.gl Pk200004 110000
0190000
190000
BDeficit09900007 460000
Ph 000
30000
ultimately lostofPPE 2100000 is now
valued 4 230000 Restoffset
loss 70000cal

By CA PRATIK JAGAT
FRIEAM FACULTY