company accounting Property Plant Equipment参考.ppt

* * * * * * * * * * * * * * * * * Chapter 7 Property, Plant Equipment Prepared by Emma Holmes The nature of PPE AASB 116 defines property, plant equipment (PPE) as: tangible items with a specific use within the entity that are expected to be used during more than one period (ie. they are non-current in nature) AASB 116 specifically excludes assets held for re-sale PPE is normally divided into classes. Common classes include land, buildings, machinery, motor vehicles. Tangible vs. intangible distinction discussed in Chapter 9 Initial recognition of PPE Cost of an item is recognised as an asset if: it is probable that economic benefits will flow to the entity, and the cost can be reliably measured Where future economic benefits are not expected to flow to the entity, costs incurred should be expensed. Component parts (with different useful lives) are required to be separately accounted for. Eg. An aircraft – the engine, frame and fittings of an aircraft are likely to have different useful lives. Initial measurement of PPE PPE is initially measured at cost, which includes: Purchase price (at fair value) Directly attributable costs required to bring the asset to the location and condition necessary for it to operate Initial estimate of costs of dismantling, removing the item or restoring the site Purchase price includes duties and taxes but excludes rebates and discounts Refer section 7.3.2 of text for detailed lists of items specifically included and excluded from this component Eg- an offshore oil platform Measurement subsequent to initial recognition AASB 116 allows a choice of two possible measurement models: Cost model Revaluation model Accounting policy choice of this decision based primarily on relevance of information. The policy that is chosen must be applied to a whole class of assets May change policy, but only if results in more relevant/ reliable information Each model will be di