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15 Ppe Part 1
15 Ppe Part 1
Related standard:
PFRS 16: Property, Plant and Equipment
Elements of Cost
1. Purchase price, including non-refundable purchase
taxes, after deducting trade discounts and rebates.
2. Costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable
of operating in the manner intended by the
management.
3. Present value of decommissioning and restoration
costs to the extent that they are recognized as
obligation
INTERMEDIATE ACCTG 1B (by: MILLAN)
Cessation of capitalizing costs to PPE
Recognition of costs in the carrying amount of an item
of PPE ceases when the item is in the location and
condition necessary for it to be capable of operating in
the manner intended by management.
Example:
Case: An old structure is demolished to make way for the
construction of a new building.
a. Fair value of asset Given up Plus cash Paid/ minus cash received
b. Fair value of asset Received
c. Carrying amount of asset Given up Plus cash Paid/ minus cash received
If the exchange lacks commercial substance, the asset received from the
exchange is measured at (c) above.