Property, Plant and

Equipment
Chapter 18
OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Determination of PPE, Investment Property
and Biological Assets
Definition
Initial recognition
Recognition issues
Land account (p. 630)
Building account (p. 631)
Biological Assets PAS 41, Agriculture
Bearer Plants the New Requirements

The International Accounting Standards Board (IASB) issued

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) on 30
June 2014, which changed the accounting requirements for biological
assets that meet the definition of bearer plants (e.g., fruit trees).
Bearer plants will now be within the scope of IAS 16 Property, Plant
and Equipment and will be subject to all of the requirements therein.
This includes the ability to choose between the cost model and
revaluation model for subsequent measurement.
Agricultural produce growing on bearer plants (e.g., fruit growing on
a tree) will remain within the scope of IAS 41 Agriculture.
Government grants relating to bearer plants will now be accounted
for in accordance with IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance, instead of in accordance with
IAS 41.
Bearer Plants the New Requirements
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Component of Cost

Initial measurement
Directly attributable costs
Cost of machinery when purchased (18-1)
Treatment of old and new installation cost
Treatment of non-recoverable purchase tax
Treatment of royalty payment on machines
Costs chargeable to land
Special notes
Land improvements
Costs chargeable to building when purchased (18-2)
Cost of building when constructed (18-12)
Treatment of demolition cost
Treatment of insurance
Component of Cost

Acquisition of land and building

Building to be used as PPE, inventory or investment property
PIC Q&A No. 2012-02 (effective 2013) Cost of a new building constructed on the site of a
previous building
Old building was demolished right away after purchase
New building will be used as PPE
New building will be used as Investment Property
New building will be held as inventory
Property acquired in a prior reporting period and used it as owner-occupied property

Self-constructed Asset
Treatment of Savings or loss on construction (When old building is to be demolished)
Other items and their treatments
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Determination of Cost of Acquisition of
Property
Acquisition on cash basis (18-3)
Basket price
Acquisition on account(18-4, 18-5)
Acquisition on deferred settlement terms (18-6)
Acquisition by issuance of shares of stock (18-9)
Acquisition by issuance of bonds payable (18-10)
Exchange transactions (18-7)
Commercial Substance
Trade in (18-8)
Donation (18-11)
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Borrowing Costs

Qualifying Asset
Commencement, Suspension and Cessation of Capitalization
Accounting for Borrowing Costs
Asset financed by specific borrowing
Asset financed by general borrowing
Asset financed both by specific and general borrowings
Specific borrowing that was used for general purpose
Expenditures Incurred Evenly
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Subsequent Expenditures

Revenue expenditure vs. Capital expenditure

Improvements or betterments
Rearrangement cost
Accounting for Major replacement
Separate identification practicable
Separate identification not practicable
Repairs
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Subsequent Measurement

Cost Model vs. Revaluation Model

Depreciation
Physical
Functional
Component
Methods
Straight-line
Composite
Group
Working hours
Output or production
Sum of years digits
Declining Balance
Double declining balance
Inventory or appraisal
Retirement method
Replacement method
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
 OUTLINE

Determination of PPE, Investment Property and Biological Assets

Component of Cost
Determination of Cost of Acquisition of Property
Government Grants
Borrowing Cost
Accounting for Major Replacements
Subsequent Measurement
Derecognition
FS Presentation
PFRS for SME
Comprehensive Problems
18-38, 18-41, 18-42
18-43
18-44, 18-45, 18-46
Wasting Assets
Chapter 19
OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown
Liquidating Dividend
FS Presentation
Disclosure
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown
Liquidating Dividend
FS Presentation
Disclosure
Depletion

Units of Output Method

Total cost of the wasting asset = AC + EC + IDC + ERC (discounted)
Depletion = (TCWA / Units est. to be extracted) x Units extracted
Change in the units estimated to be extracted and additional
development costs 19-1, 19-2
Change in asset retirement obligation (restoration cost) - 19-2
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment 19-3, 19-4
Shutdown
Liquidating Dividend
FS Presentation
Disclosure
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown p. 735, 19-5
Liquidating Dividend
FS Presentation
Disclosure
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown
Liquidating Dividend p. 736-737, 19-6
FS Presentation
Disclosure
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown
Liquidating Dividend
FS Presentation p. 738
Disclosure p. 738
 OUTLINE

Applicability and Inapplicability

Recognition of Exploration and Evaluation Assets
Initial Measurement
Subsequent Measurement
Depletion
Depreciation of Mining Equipment
Shutdown
Liquidating Dividend
FS Presentation p. 738
Disclosure p. 738
19-8, 19-9

E = 1,125,000
Investment Property
Chapter 20
OUTLINE

Items included and not included

Classification issues 20-1, 20-2, 20-3
Initial recognition and measurement
Transfers 20-7, 20-8
Additional notes for PFRS for SME
Comprehensive Problem 20-11