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IAS 16-Property,Plant and Equipment

A course covering key principles in International Accounting Standard 16 (IAS 16) on Property,Plant and Equipment
4.8 (35 ratings)
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1,884 students enrolled
  • 1.5 hours on-demand video
  • 1 Article
  • 1 Supplemental Resource
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
What Will I Learn?
By the end of this course you will be able to understand the principles surrounding IAS 16-Property,Plant and Equipment
View Curriculum
  • A basic understanding of accounting and financial reporting up to financial statement preparation level.

A review of the key concepts and principles of International Accounting Standard 16 (IAS 16) on Property,Plant and Equipment.

The course includes theoretical principle lectures including a detailed discussion to teach the difference between adjusting and non adjusting events after the reporting period. These principles are then illustrated practically in class examples that focus the practical application of the theory in an interactive manner.

You will need to download the lecture slides and work through the lecture videos and the class examples.

The course is structured to assist three categories of delegates who require knowledge of International Financial Reporting Standards (IFRS):

  • Students studying accounting at university;
  • Candidates studying to pass board and professional exams;
  • Professionals looking to keep up to date with continuing professional education.

The Tabaldi approach is practical and our lecturer focuses on making the sometimes complex principles of financial reporting simple and practical.

You will need to engage with the lecturer with pen in one hand and calculator in the other, mental application and a proactive approach will ensure that you master this topic under financial reporting and accounting.

Who is the target audience?
  • Students studying accounting at university
  • ACCA candidates
  • CIMA candidates
  • Professional accountants for continuing professional education / development
  • Candidates sitting for professional accounting exams
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Curriculum For This Course
Expand All 20 Lectures Collapse All 20 Lectures 02:58:44
Notes download and overview
2 Lectures 00:27

Please read the instructions and guidance on how to utilize this course and make the most from your learning experience.

Introduction and guidance ( Read)

Download the IAS 16 Property, Plant and Equipment summary notes before proceeding with the lectures. Please note that the layout is set as one slide per page and consists of a total of 88 slides. We suggest that you print the slides as 2 or 4 slides per page to save printing costs.

IAS 16-Property,Plant and Equipment Lecture Notes ( PDF)
87 pages
IAS 16-Principles and application
2 Lectures 06:43

Richard attempts to cover the big picture for IAS 16 Property, Plant and Equipment in a one page diagramatic summary.

The rest of the study unit will focus on delving deeper into the details of IAS 16, but it helps to start with a big picture in mind.

IAS 16 PPE Standard on a page-SOAP Summary

This video defines Property, Plant and Equipment (PPE), discusses the scope of IAS 16 and then gives some examples of PPE to give you an understanding of the nature of PPE.

The Nature of Property,Plant and Equipment
Initial Recognition and Measurement
6 Lectures 30:20

IAS 16 gives the recognition criteria as to when the item of Property, Plant and Equipment may be recognised.

Initial Recognition of PPE

Property, Plant and Equipment is initially recognised at cost. The "cost" concept has a few intricacies that you must work through before you can fully understand this initial recognition at cost.

Initial Measurement of PPE

An example to illustrate the initial measurement of Property, Plant and Equipment.

This examples includes a deferred payment term (a financing element) where the contractual interest on deferred payment is less than the market interest rate.

Example: Initial Measurement of PPE with Financing Element

An example to illustrate the initial measurement of Property, Plant and Equipment.

This examples includes a provision for restoration that requires capitalisation to the cost of PPE upon initial recognition.

Example: Initial Measurement of PPE with Financing Element

The measurement of cost in an exchange transaction for PPE results in the received asset being recognised at the fair value of the asset being given up.

If the fair value of the asset being given up cannot be determined, then the fair value of the asset received is used. If neither asset has a fair value that can be ascertained, or the transaction has no commercial substance then the asset is recognised initially at the carrying amount of the asset being given up.

Exchange Transactions

Subsequent costs are only capitalised if they meet the recognition criteria:

- Future economic benefits are probable;

- Costs can be measured reliably

Make sure you understand that day to day servicing costs are never capitalised, but are expensed in profit or loss.

Subsequent Costs
Depreciation Theory and Calculations
2 Lectures 13:05

This video introduces the theory behind the calculation of depreciation, ensure that you understand this before proceeding with the calculations.

Depreciation Theory

IAS 16 requires the use of the component approach. Under this approach, the different components (read parts) of an asset are identified and depreciated based on the characteristics and useful lives of the specific components.

Component Approach
Revaluation Model and Revaluation Surplus
7 Lectures 38:11

IAS 16 requires an accounting policy choice for the subsequent measurement of Property, Plant and Equipment. The choice is between two models, the cost model and the revaluation model.

This video introduces the revaluation model and some of the key concepts required to understand the revaluation model.

Revaluation Model

Revaluations are always done at the beginning of the year, ideally with reference to a fair market value. If no fair market value can be ascertained, then a Net Replacement Value (NRV) may be utilised, but it must be the NRV at the beginning of the year and must be compared to the carrying amount at the beginning of the year.

The revaluation gain will go through OCI, but there are two options available when it comes to dealing with depreciation. Either depreciation can be netted off against the Gross Replacement Value (Eliminated), or alternatively the Gross Replacement Value may be disclosed along with a proportionately restated accumulated depreciation. This is another accounting policy choice, and it is vital that you understand the difference right from the journal stage of the accounting process.

Revaluation-Elimination vs Restatement of Depreciation

An example illustrating the difference between the application of the Elimination method (sometimes called the NRV method) and the Proportionate Restatement Method (sometimes called the GRV method).

Make sure you understand the calculation of the revaluation gain, as well as the journals for the two different methods.

Example:Revaluation- Elimination vs Restatement of Depreciation

Richard attempts to explain the concept of Revaluation Surplus, and that it is an equity account.

Remember that the gains on PPE that go to OCI are not yet part of Revaluation Surplus. OCI is an income account, and it will be closed out to the equity account Revaluation Surplus at the end of the financial period.

Revaluation Surplus

Revaluation Surplus will need to be realised directly to Retained Earnings in equity (never reclassified through profit or loss). There are two accounting policies to choose from regarding this realisation:

1. Realise all at once upon disposal of the revalued asset, OR

2. Realise over time as the underlying asset is used

Realisation of Revaluation Surplus

An example illustrating the realisation of Revaluation Surplus upon disposal of the underlying revalued asset.

Realisation of Revaluation Surplus on Disposal

An example illustrating the realisation of Revaluation Surplus as the underlying revalued asset is used.

Remember that you use the depreciation calculation to calculate the revaluation surplus portion to transfer to retained earnings.

Realisation of Revaluation Surplus through use
1 Lecture 02:59

This video discusses the derecognition principles of Property, Plant and Equipment and illustrates the most common form of derecognition being disposal.

About the Instructor
4.2 Average rating
333 Reviews
7,938 Students
9 Courses
Accounting and Financial Reporting specialists

Tabaldi Education is an organisation that specialises in Accounting and Financial Reporting training and consulting.

Our lecturing team at Tabaldi consists of a group of highly qualified Chartered Accountants who have lectured at undergraduate and postgraduate level, as well as having presented professional accounting training around the world.

Richard Starkey one of Tabaldi's leading lecturers has had years of experience lecturing and consulting for large international corporates, including the big four audit firms within South Africa. Listed companies in Europe, Africa and the Middle East. Richard is passionate about helping people master the basic principles of financial reporting, and takes an interactive journal driven approach to his lectures.

4.2 Average rating
333 Reviews
7,938 Students
9 Courses
4.2 Average rating
333 Reviews
7,938 Students
9 Courses
4.2 Average rating
285 Reviews
6,240 Students
8 Courses
4.2 Average rating
285 Reviews
6,240 Students
8 Courses
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