3Non-currentassets..docVIP

IAS 16 property ,plant and equipment ISA 16 covers all aspects of accounting for property, plant and equipment. This represents the bulk of items which are‘tangible’non-current assets 1.1Definition: The standard gives a large number of definitions ●Property, plant and equipment are tangible assets 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. cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. Residual value is the net amount which the entity expects to obtain for an asset at the end of its useful life after deducting the expected costs of disposal. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Carrying amount is the amount at which an asset is recognized in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. in this context, recognition simply means incorporation of the item in the business’s accounts, in this case as a non-current asset. The recognition of property, plant and equipment depends on two criteria. It is probable that future economic benefits associated with the asset will flow to the entity The cost of the asset to the entity can be measured reliably Initial measurement Once an item of property, plant and equipment qualifies for recognition as an asset, it will initially be measured at cost Components of cost The standard lists the components of the cost of an item of property, plant and equipment Purchase price ,less any trade discount or rebate Import duties and non-refundable purchase taxes