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Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition by Liesel Knorr, Graham Holt, Abbas A. Mirza

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Chapter 10
PROPERTY, PLANT, AND EQUIPMENT (IAS 16)

BACKGROUND AND INTRODUCTION

This Standard prescribes rules regarding the recognition, measurement, and disclosures relating to property, plant, and equipment (often referred to as fixed assets) that would enable users of financial statements to understand the extent of an entity’s investment in such assets and the movements therein.
The principal issues involved relate to the recognition of items of property, plant, and equipment, determining their costs, and assessing the depreciation and impairment losses that need to be recognized.

SCOPE

The requirements of IAS 16 are applied to accounting for all property, plant, and equipment unless another Standard permits otherwise, except for
• Property, plant, and equipment classified as held for sale in accordance with IFRS 5
• Biological assets relating to agricultural activity under IAS 41
• Mineral rights, mineral reserves, and similar nonregenerative resources
DEFINITIONS OF KEY TERMS
(in accordance with IAS 16)
 
Property, plant, and equipment. Tangible assets that are held for use in production or supply of goods and services, for rental to others, or for administrative purposes and are expected to be used during more than one period.
Cost. The amount paid or fair value of other consideration given to acquire or construct an asset.
Useful life. The period over which an asset is expected to be utilized or the number of production units expected to be obtained from the use of the ...

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