IAS 16 2023 with 100% questions and answers

IAS 16 PPE IAS 16 does not cover biological assets, held for sale, mineral rights and reserves PPE are tangible items held for use in the production or supply of goods and services expected to be used for more than 1 year PPE when: -probable future economic benefits that will flow to entity -cost can be measured reliably spare parts/ replacement parts recognized in inventory and P&L as consumed major parts part of PPE if expected to be used more than 1 year conditions of operations -permits, expected replacements, inspections -capitalized as part of PPE PPE initially recognized at cost cost not included cost of opening new facility introducing new product or service conducting business in new location or customer administrative fixed and variable overhead any relocation costs after asset placed in service testing after its in its place costs for inactivity or operating at less than full productivity disposal cost include PV of disposal cost as component asset acquired through non-monetary exchange fair value unless: cant be measured reliably no commercial substance subsequent measurement 2 models under IFRS irrevocable election by class cost method carry at historical cost - depreciation and impair same as GAAP revaluation measured at fair value -very expensive -lots of appraisals how often revalued? annually if fair value changes freqently, if not at least every 3-5 years where is this often used? countries with high inflation required disclosures for revaluation? CV if it had been carried at cost what if valued up? increase goes to revaluation surplus- OCI where it is accumulated in equity debit goes to asset what if valued down? decrease goes straight to P&L, credit asset initial revaluation up subsequent revalution up DR: asset CR: revaluation surplus-OCI initial revaluation down subsequent revalution up increase offsets previous loss up to loss amount, excess goes to OCI DR: Asset CR: loss CR: revalutaion surplus- OCI initial revaluation down subsequent revalution down CR: asset DR: loss initial revaluation up subsequent revalution down DR: previous revaluation surplus DR: Loss CR: asset 2 methods to adjust depreciation proportional gross proportional when revalued- change AD and cost proportionally gross first eliminate all AD then move on to cost all revaluation goes to equipment when is revaluation surplus transferred to RE? de-recognition or as the asset is used or never as asset is used entry equal to difference between original depreciation and new depreciation Rev Surplus RE when is an asset de-recognized sold no future benefits expected general idea for depreciation use method that best reflects future flow of benefits IFRS dep. methods accelerated straight line units of production how often must estimates be evaluation every balance sheet date component depreciation required by IFRS clean up provisons must be both depreciated and written down using interest expense