IAS 16 - PPE

Question 1

what is PPE used for?

Answer 1

• in the production and supply of g/s
• renting to others
• admin purposes

Question 2

what can we capitalize to cost of PPE?

Answer 2

• any expenses to enhance the asset, not day-to-day maintenance
• major inspection costs

Question 3

when do we impair?

Answer 3

• through P/L
• if there are indicators of imp = recoverable amount < carrying amount

Question 4

what is recoverable amount?

Answer 4

high of value in use and FV less costs to sell

Question 5

can we reverse impairments?

Answer 5

yes, limited to previous impairments (cannot reverse impairments to the extent that we raise it above initial cost)

Question 6

what do we do if we receive compensation from a third party for an impairment loss?

Answer 6

we include the amount in P/L and record separate transactions for impairment and compensation (do not net the amounts)

Question 7

what are some indicators of impairment?

Answer 7

• planning to hold an asset for sale
• restructuring
• future operating losses

Question 8

what do we do with PPE recognized for environmental purposes?

Answer 8

still recognize as PPE, even though it won’t directly increase FEBs

Question 9

what is the CA of PPE under the cost model?

Answer 9

cost less acc dep less impairment losses

Question 10

what is the CA of PPE under the revaluation model?

Answer 10

FV less acc dep less impairment losses

Question 11

how do we recognize revaluation for PPE?

Answer 11

through OCI
all closed off to reval surplus
gain goes directly to A, loss goes to acc imp

Question 12

how do we recognize impairment?

Answer 12

imp loss (P/L)
acc imp (-A)

Question 13

what do we do with compensation received for impairment?

Answer 13

include in P/L, separate from impairment