Tangible Assets

Question 1

What are Tangible Assets under IAS 16?

Answer 1

PPE - Property, plant and equipment

Question 2

What is Capitalisation?

Answer 2

Adding an expenditure to the cost of the asset rather than expensing it

Question 3

Initial measurement of PPE?

Answer 3

Measured at cost
- Purchase price
- Costs directly attributable to bring an asset to location/ and for it to operate
- Estimates of dismantling/ removal costs

Question 4

What are the two approaches to measurement of PPE after recognition?

Answer 4

• Cost model: Asset is carried at cost less accumulative depreciation and impairment
• Revaluation model: Asset is carried at fair value at revaluation date less subsequent depreciation

Question 5

According to the revaluation model, how do we record the difference in the carrying amount of an asset as a result of revaluation?

Answer 5

• Increase: Recognised as Other Comprehensive Income (OCI) shown in equity
• Decrease: Expense