international accounting standards (IAS) 16

International Accounting Standards (IAS) 16

1. International Accounting Standards (IAS) 16

2. Overview It concerns accounting for property, plant and equipment (known more generally as  fixed assets ) IAS 16  is an  international financial reporting standard  adopted by the  International Accounting Standards Board  (IASB). issued in December 1993 by the  International Accounting Standards Committee , the predecessor to the IASB. It was reissued in December 2003 and has been amended multiple times, most recently in 30 June 2014 International Accounting Standards were replaced in 2001 by the International Financial Reporting Standards (IFRS)

3. Rule for IAS 16 IAS 16 states that the cost of an item of property, plant and equipment shall be recognized as an asset if, and only if: It is probable that future economic benefits associated with the asset will flow to the enterprise The cost of the asset must be reliably measurable 

4. Goal The goal, was to make it easier to compare businesses around the world, increase transparency and trust in financial reporting, and foster global trade and investment.

5. Objective of IAS 16 The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. The principal issues are the recognition of assets, the determination of their carrying amounts, and the depreciation charges and impairment losses to be recognized in relation to them.

6. Application of IAS IAS 16 applies to property, plant and equipment (PPE). The standard itself defines PPE as "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  [accounting] period ."

7.  Measurement Initial Measurement Purchase price  & any  costs directly attributable Subsequent Measurement An entity may choose 2 accounting models: Cost model:  An entity shall carry an asset at its  cost less any accumulated depreciation and any accumulated impairment losses . Revaluation model: An entity shall carry an asset at a  revalued amount . Revalued amount is its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

8. Conclusion Globally comparable accounting standards promote transparency, accountability, and efficiency in financial markets around the world.

9. https://www.ifrsbox.com/ias-16-property-plant-and-equipment/