IAS 16 Property

1IAS16Property,PlantandEquipmentThisversionincludesamendmentsfromIFRS6ExplorationforandEvaluationofMineralResourcesissuedon9December2004.ThisrevisedStandardsupersedesIAS16(1998)Property,PlantandEquipmentandshouldbeappliedforannualperiodsbeginningonorafter1January2005.Earlierapplicationisencouraged.Editorialnote:IAS36(revised2004)makesanumberofamendmentstoIAS16whichareapplicableonlytoentitiesthatelecttoapplyIAS16(asrevisedin2003)beforeitseffectivedate.SeeIAS36,AppendixBAmendmenttoIAS16.ContentsIntroductionIN1-IN15InternationalAccountingStandard16Property,PlantandEquipmentObjective1Scope2-5Definitions6Recognition7-14InitialCosts11SubsequentCosts12-14Measurementatrecognition15-28ElementsofCost16-22MeasurementofCost23-28Measurementafterrecognition29-66CostModel302RevaluationModel31-42Depreciation43-62Depreciableamountanddepreciationperiod50-59Depreciationmethod60-62Impairment63-64CompensationforImpairment65-66Derecognition67-72Disclosure73-79Transitionalprovisions80Effectivedate81Withdrawalofotherpronouncements82-83Appendix:AmendmentstoOtherPronouncementsApprovalofIAS16bytheBoardBasisforConclusions:IntroductionBC1-BC3ScopeBC4RecognitionBC5-BC12MeasurementatrecognitionBC13-BC24AssetDismantlement,RemovalandRestorationCostsBC13-BC16AssetExchangeTransactionsBC17-BC24MeasurementafterrecognitionBC25-BC33RevaluationModelBC253Depreciation-UnitofMeasureBC26-BC27Depreciation-DepreciableAmountBC28-BC29Depreciation-DepreciationPeriodBC30-BC32Depreciation-DepreciationMethodBC33DerecognitionBC34-BC35DerecognitionDateBC34GainClassificationBC35TransitionalprovisionsBC36SummaryofchangesfromtheexposuredraftBC37TableofConcordance4InternationalAccountingStandard16Property,PlantandEquipment(IAS16)issetoutinparagraphs1-83andtheAppendix.AlltheparagraphshaveequalauthoritybutretaintheIASCformatoftheStandardwhenitwasadoptedbytheIASB.IAS16shouldbereadinthecontextofitsobjectiveandtheBasisforConclusions,thePrefacetoInternationalFinancialReportingStandardsandtheFrameworkforthePreparationandPresentationofFinancialStatements.IAS8AccountingPolicies,ChangesinAccountingEstimatesandErrorsprovidesabasisforselectingandapplyingaccountingpoliciesintheabsenceofexplicitguidance.IntroductionIN1.InternationalAccountingStandard16Property,PlantandEquipment(IAS16)replacesIAS16Property,PlantandEquipment(revisedin1998),andshouldbeappliedforannualperiodsbeginningonorafter1January2005.Earlierapplicationisencouraged.TheStandardalsoreplacesthefollowingInterpretations:•SIC-6CostsofModifyingExistingSoftware•SIC-14Property,PlantandEquipment-CompensationfortheImpairmentorLossofItems•SIC-23Property,PlantandEquipment-MajorInspectionorOverhaulCosts.ReasonsforRevisingIAS16IN2.TheInternationalAccountingStandardsBoarddevelopedthisrevisedIAS16aspartofitsprojectonImprovementstoInternationalAccountingStandards.TheprojectwasundertakeninthelightofqueriesandcriticismsraisedinrelationtotheStandardsbysecuritiesregulators,professionalaccountantsandotherinterestedparties.Theobjectivesoftheprojectweretoreduceoreliminatealternatives,redundanciesandconflictswithintheStandards,todealwithsomeconvergenceissuesandtomakeotherimprovements.IN3.ForIAS16theBoard'smainobjectivewasalimitedrevisiontoprovideadditionalguidanceandclarificationonselectedmatters.TheBoarddidnotreconsiderthefundamentalapproachtotheaccountingforproperty,plantandequipmentcontainedinIAS16.5TheMainChangesIN4.ThemainchangesfromthepreviousversionofIAS16aredescribedbelow.ScopeIN5.ThisStandardclarifiesthatanentityisrequiredtoapplytheprinciplesofthisStandardtoitemsofproperty,plantandequipmentusedtodevelopormaintain(a)biologicalassetsand(b)mineralrightsandmineralreservessuchasoil,naturalgasandsimilarnon-regenerativeresources.Recognition-SubsequentCostsIN6.Anentityevaluatesunderthegeneralrecognitionprincipleallproperty,plantandequipmentcostsatthetimetheyareincurred.Thosecostsincludecostsincurredinitiallytoacquireorconstructanitemofproperty,plantandequipmentandcostsincurredsubsequentlytoaddto,replacepartof,orserviceanitem.ThepreviousversionofIAS16containedtworecognitionprinciples.Anentityappliedthesecondrecognitionprincipletosubsequentcosts.MeasurementatRecognition-AssetDismantlement,RemovalandRestorationCostsIN7.Thecostofanitemofproperty,plantandequipmentincludesthecostsofitsdismantlement,removalorrestoration,theobligationforwhichanentityincursasaconsequenceofinstallingtheitem.Itscostalsoincludesthecostsofitsdismantlement,removalorrestoration,theobligationforwhichanentityincursasaconsequenceofusingtheitemduringaparticularperiodforpurposesotherthantoproduceinventoriesduringthatperiod.ThepreviousversionofIAS16includedwithinitsscopeonlythecostsincurredasaconsequenceofinstallingtheitem.MeasurementatRecognition-AssetExchangeTransactionsIN8.Anentityisrequiredtomeasureanitemofproperty,plantandequipmentacquiredinexchangeforanon-monetaryassetorassets,oracombinationofmonetaryandnon-monetaryassets,atfairvalueunlesstheexchangetransactionlackscommercial6substance.UnderthepreviousversionofIAS16,anentitymeasuredsuchanacquiredassetatfairvalueunles