Discussion Questions:

1. Define property, plant, and equipment as embodied in AIS No. 16.

 AIS 16: “Property, plant, and equipment are tangible assets that are held for use in
production or supply of goods or services, for rental to others, or for administrative
purposes, and are expected to be used during more than one period.”
2. What are the group classification of property, plant and equipment? Identify one from the other.
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3. Explain the valuation of property, plant, and equipment.
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4. Enumerate the different arrangement of acquiring PPE.
 Cash basis
 On account subject to cash discount
 Installment basis
 Issuance of share capital
 Issuance of bonds payable
 Exchange
 Donation
 Government grant
 Construction
5. What does the cost asset acquired on cash basis include?
 Cash paid plus directly attributable costs. The costs of asset acquired on cash basis
include cash paid and directly attributable costs namely freight, installation cost and other
cost imperative in bringing the asset to the location and condition for the intended
purpose.
6. If assets are acquired on account subject to cash discount, what is the cost of asset acquired?
 If assets are acquired on account subject to cash discount, the cost of asset acquired is
equal to the invoice price, minus the discount, regardless of whether the discount is taken
or not.
7. Discuss the accounting procedure for determining the acquisition cost of asset acquired on
installment basis, where there is:
a. Cash price available – If an asset is offered at a cash price and at an installment price and
is purchased at an installment price, the asset shall be recorded at the cash price. If
acquired through installment and payment is deferred beyond normal credit terms, the
difference between the cash price equivalent and the total payment is recognized as
interest over the period of credit, uncles such interest capitalized as allowed in IPSAS 5 –
Borrowing Cost.
b. No cash price available – If an asset is acquired by installment and there is no cash price,
the asset is recorded at an amount equal to present value of all payments using an implied
interest rate.
8. Discuss the accounting procedure for the recording of an asset acquired by issuance of securities.
9. What is the cost of the asset acquired by way of nonmonetary exchange where no cash is
involved? Where cash is involved?
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10. What is the cost of asset acquired by donation?
  Sec. 10 if without condition, the cost of PPE acquired shall be taken up at its fair value at
the date it is acquired and all expenses incurred in connection with the donated asset,
such as delivery and installation costs shall be included in the amount recognized as
asset; fair value of the PPE shall be recognized as income from grants and donation.
Sec. 11 if with condition or restrictions, a liability shall be recognized until the conditions
or restrictions have been fulfilled.
11. What expenditure are included in determining the cost of asset acquitted by construction?
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12. Discuss the classification of land in balance sheet.
13. Mention the items which should be capitalized as cost of:
a. Land
b. Building acquired by purchase
c. Building acquired when constructed
d. Machinery and equipment
14. Distinguish capital expenditure from revenue expenditure.
15. Describe the costs incurred after acquisition.
16. Discuss the accounting procedure for capital expenditure.
17. Discuss the accounting procedure when a PPE is disposed by way of sale.
18. Discuss the accounting procedure when a PPE is loss by fire.