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متابعة

If PPE consists of three major parts and each part has its significnat cost of the total cost. Is each part of PPE depreciated separately?

PPE stands for Property, Plant & Equipment

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تم إضافة السؤال من قبل Muhammad Faheem , Consultant- Accounts, Audit & Taxation , Basim Associates
تاريخ النشر: 2013/12/07
Zahid Chandio
من قبل Zahid Chandio , Finance Controller , Americana

According to, International accounting standard (IAS-16) If an entity is following cost model of asset recognition than for assets which have significant cost parts in relation to its total cost, than such items must be depreciated seperately.

 

MAJOUL Fadhel - CPA- CIA-CFE-CRMA-CISI
من قبل MAJOUL Fadhel - CPA- CIA-CFE-CRMA-CISI , Consulting role related to Internal Audit , Dublin Investment & Management of Health Services Co

It depends on the framework, under US GAAP this matter is not treated and in practice not followed, under IFRS YES, If you have major parts that have a different usuful life than the principal asset you have to depreciate them separately according to their costs and usuful llifes. 

 

SHAIKH MOHAMMED BASHEER AHMED SHAIKH
من قبل SHAIKH MOHAMMED BASHEER AHMED SHAIKH , Account Manager , Tarik Al Zahid Holding Company

Yes, IAS16 does not prescribe the unit of measure for recognition – what constitutes an item of property, plant, and equipment. [IAS16.9]  that if the cost model is used, each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately. [IAS16.43]

Asad zaman
من قبل Asad zaman , Audit/Finance , Rafaqat Baber and co

yes, and the big example is that of aeroplane

Menerva Melad
من قبل Menerva Melad , Account Executive, Key Accounts , Graphic Home Company

If an entity is following cost model of asset recognition than for assets which have significant cost parts in relation to its total cost

Rahma  Akmad
من قبل Rahma Akmad , Accountant-General Ledger , Sidra Medicine

If that part is relevant to that particular PPE, and then the PPE cannot be in used without those parts, then it must be added as part of cost of PPE, and iwill be depreciated accordingly (retro or prospective).

Abubakar Abubakar
من قبل Abubakar Abubakar , MANAGING PARTNER , ZIB CONSULTANTS (ZIBCO)

The answer from brother zahid is correct as per IAS16.

Shamim Khan Dawar
من قبل Shamim Khan Dawar , Group Finance Manager , JAWAHR | Jawa Logistics | Orient Trading(OMATRA)

Yes.

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