IAS 16-Property,Plant and Equipment

A course covering key principles in International Accounting Standard 16 (IAS 16) on Property,Plant and Equipment
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  • Lectures 20
  • Length 3 hours
  • Skill Level All Levels
  • Languages English
  • Includes Lifetime access
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    Available on iOS and Android
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About This Course

Published 10/2014 English

Course Description

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.

What are the requirements?

  • A basic understanding of accounting and financial reporting up to financial statement preparation level.

What am I going to get from this course?

  • By the end of this course you will be able to understand the principles surrounding IAS 16-Property,Plant and Equipment

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

What you get with this course?

Not for you? No problem.
30 day money back guarantee.

Forever yours.
Lifetime access.

Learn on the go.
Desktop, iOS and Android.

Get rewarded.
Certificate of completion.


Section 1: Notes download and overview

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

87 pages

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.

Section 2: IAS 16-Principles and application

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.


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.

Section 3: Initial Recognition and Measurement

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


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.


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.


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.


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.


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.

Section 4: Depreciation Theory and Calculations

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


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.

Section 5: Revaluation Model and Revaluation Surplus

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.


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.


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.


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 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


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


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.

Section 6: Derecognition

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

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Instructor Biography

Tabaldi Accounting Education, 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.

Instructor Biography

Instructor Biography

Instructor Biography

Instructor Biography

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