PROPERTY, PLANT & EQUIPMENT

Tangible
assets

PPE Used in
business

Over a
period of
more than
one year
MEASURING PPE

1.Initial Recognition
2.Subsequent Recognition
MEASUREMENT AT RECOGNITION

1. Purchase Price, including import duties and

nonrefundable purchase taxes, after deducting trade
discounts and rebates
2. Costs directly attributable to bringing the asset to the
location and necessary for it to be capable of operating
3. Initial estimate of dismantling and removing the item and
restoring the site on which it is located, the obligation for
which an entity incurs.
LAND
1. Purchase price
2. Legal fees and other expenditures for establishing clean title
3. Broker or agent commission
4. Escrow fees
5. Fees for registration and transfer of title
6. Cost of relocation or reconstruction of property belonging to others in order to
acquire possession
7. Mortgages, encumbrances, and interest assumed by buyer
8. Unpaid taxes up to date of acquisition assumed by buyer
9. Cost of survey
10. Payments to tenant to induce them to vacate the land
11. Cost of permanent improvements such as cost of clearing, cost of grading,
levelling and landfill
12. Cost of option to buy the acquired land
LAND IMPROVEMENTS
1. Fences
2. Water system
3. Drainage systems
4. Sidewalks
5. Pavements
6. Cost of trees
7. Shrubs
8. Landscaping
BUILDING (acquired by purchase)
1. Purchase price
2. Legal fees and other in connection with the purchase
3. Unpaid taxes up to date of acquisition assumed by buyer
4. Mortgages, encumbrances, and interest assumed by buyer
5. Payments to tenant to induce them to vacate the land
6. Lighting installations, partitions, repairs
BUILDING (when constructed)
1. Materials used, labor and overhead incurred
2. Building permit or license
3. Architect fee
4. Superintendent fee
5. Cost of excavation
6. Cost of temporary buildings used as construction offices
7. Interest on construction loans and insurance
8. Equipment and fixtures made permanent part of the structure
9. Cost of temporary safety fence and cost of subsequent removal
10. Safety inspection fee
MACHINERY
1. Purchase price
2. Freight handling, storage and other costs related to acquisition
3. Insurance while in transit
4. Installation cost, including site preparation and assembling
5. Cost of testing and trial run
6. Initial estimate of cost of dismantling and removing the machinery and
restoring the site on which it is located, and for which the entity has a
present obligation
7. Fees paid to consultants for advice on the acquisition
8. Cost of safety rail and platform surrounding machine
9. Cost of water device to keep machine cool
10.Irrecoverable or nonrefundable tax, except VAT
DEPRECIATION