Indian Accounting Standard (Ind AS) 16 Summary
Indian Accounting Standard (Ind AS) 16, Property, Plant and Equipment is applied in the accounting for Property, Plant and Equipment (PPE).
PPE is initially recognised at cost.
Cost includes all expenditure directly attributable to bringing the asset to the location and working condition for its intended use.
Cost includes the estimated cost of dismantling and removing the asset and restoring the site.
Subsequent expenditure is capitalised if it is probable that it will give rise to future economic benefits.
Changes to an existing decommissioning or restoration obligation are generally added to or deducted from the cost of the related asset.
The carrying amount of PPE may be reduced by government grants in accordance with Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance.
PPE is depreciated over its expected useful life.
Estimates of useful life and residual value, and the method of depreciation, are reviewed as a minimum at each reporting date. Any changes are accounted for prospectively as a change in estimate.
When an item of PPE comprises individual components for which different depreciation methods or rates are appropriate, each component is depreciated separately.
PPE may be revalued to fair value if fair value can be measured reliably. All items in the same class are revalued at the same time, and the revaluations are kept up to date.
When the revaluation model is chosen, changes in fair value are generally recognised in Other Comprehensive Income (OCI).
The gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.
Compensation for the loss or impairment of PPE is recognised in the statement of profit and loss when it is receivable.