Overview

IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1 January
2005. It outlines the accounting treatment for most types of property, plant and equipment. Property,
plant and equipment is initially measured at its cost, subsequently measured either using a cost or
revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis
over its useful life.

Principles
IAS 16 establishes principles for recognising property, plant and equipment as assets, measuring their
carrying amounts, and measuring the depreciation charges and impairment losses to be recognised in
relation to them. Property, plant and equipment are tangible items that:

 are held for use in the 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.

Property, plant and equipment includes bearer plants related to agricultural activity.

The cost of an item of property, plant and equipment is recognised as an asset if, and only if:

 it is probable that future economic benefits associated with the item will flow to the entity; and
 the cost of the item can be measured reliably.

Disclosures
Measurement Basis: The entity must disclose the measurement basis used for its PPE, such as historical
cost or revaluation.

Depreciation Method: The entity must disclose the depreciation method used for its PPE, and the useful
lives or depreciation rates applied.

Revaluation: If the entity has revalued its PPE, it must disclose the basis of revaluation, the date of
revaluation, and the revalued amounts.

Impairment: If there is an indication of impairment, the entity must disclose the recoverable amount,
the carrying amount, and the impairment loss recognized.

Changes in Accounting Policies: If the entity has changed its accounting policies relating to PPE, it must
disclose the nature and reason for the change, the amount of the adjustment, and the effect on the
financial statements.

Disposals: The entity must disclose the gains or losses on disposals of PPE, and the carrying amount of
the PPE sold.

Assets Held for Sale: If any PPE is classified as held for sale, the entity must disclose the carrying
amount, the expected disposal date, and any impairment loss recognized.
Commitments and Contingencies: The entity must disclose any commitments or contingencies related
to PPE, such as contractual commitments for the acquisition of new PPE or disputes over PPE ownership.

Investment Property: If any PPE is classified as investment property, the entity must disclose the fair
value of the property, the method used to determine the fair value, and any significant changes in the
fair value during the reporting period.

Nestle
Introduction

Nestlé is a Swiss multinational food and drink processing conglomerate corporation headquartered in
Vevey, Vaud, Switzerland. It has been the largest publicly held food company in the world.

Owned Assets
Owned property, plant and equipment are shown on the balance sheet at their historical cost.
Depreciation is assessed on components that have homogeneous useful lives by using the
straight-line method to depreciate the initial cost down to the residual value over the estimated
useful lives
Leases
The Group recognizes a right-of-use (ROU) asset and a lease liability at the lease
commencement date. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the interest rate
implicit in the lease. The lease liability is subsequently measured at amortized cost using the
effective interest rate method.
There are no significant lease commitments for leases not commenced at year-end.

Unilever
Introduction
Unilever is a British multinational consumer goods company headquartered in London, England.
Unilever is the largest producer of soap in the world, and its products are available in around
190 countries.
Owned assets
Owned assets are initially measured at historical cost. Depreciation is provided on a straight-
line basis over the expected average useful lives of the assets.
Leases
The cost of a leased asset is measured as the lease liability at inception of the lease contract
and other direct costs less any incentives granted by the lessor. Depreciation is provided on a
straight-line basis from the commencement date of the lease to the end of the lease term.