IFRS amendments to IAS 16
IFRS amendments to IAS 16: In April 2001 the International Accounting Standards Board (the Board) adopted IAS 16 Property, Plant and Equipment, which had originally been issued by the International Accounting Standards Committee in December 1993. IAS 16 Property, Plant and Equipment replaced IAS 16 Accounting for Property, Plant and Equipment (issued in March 1982). IAS 16 that was issued in March 1982 also replaced some parts in IAS 4 Depreciation Accounting that was
approved in November 1975.
In December 2003 the Board issued a revised IAS 16 as part of its initial agenda of technical
projects. The revised Standard also replaced the guidance in three Interpretations (SIC-6
Costs of Modifying Existing Software, SIC-14 Property, Plant and Equipment—Compensation for the
Impairment or Loss of Items and SIC-23 Property, Plant and Equipment—Major Inspection or Overhaul
Costs).
In May 2014 the Board amended IAS 16 to prohibit the use of a revenue-based depreciation
method.
In June 2014 the Board amended the scope of IAS 16 to include bearer plants related to
agricultural activity.
Other Standards have made minor consequential amendments to IAS 16. They include
IFRS 13 Fair Value Measurement (issued May 2011), Annual Improvements to IFRSs 2009–2011 Cycle
(issued May 2012), Annual Improvements to IFRSs 2010–2012 Cycle (issued December 2013),
IFRS 15 Revenue from Contracts with Customers (issued May 2014) and IFRS 16 Leases (issued
January 2016).

IFRS amendments to IAS 16
IFRS amendments to IAS 16
International Accounting Standard 16 Property, Plant and Equipment (IAS 16) is set out in paragraphs 1–83 and the Appendix. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 16 should be read in the context of its objective and the Basis for Conclusions, the Preface to International Financial Reporting Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.
IFRS amendments to IAS 16
Introduction
IN1 International Accounting Standard 16 Property, Plant and Equipment (IAS 16) replaces IAS 16 Property, Plant and Equipment (revised in 1998), and should be applied for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. The Standard also replaces the following
Interpretations:
● SIC-6 Costs of Modifying Existing Software
● SIC-14 Property, Plant and Equipment—Compensation for the Impairment or Loss
of Items
● SIC-23 Property, Plant and Equipment—Major Inspection or Overhaul Costs.
The Board amended the scope of IAS 16 in 2014 to include bearer plants related
to agricultural activity.
IFRS amendments to IAS 16
Reasons for revising IAS 16
The International Accounting Standards Board developed this revised IAS 16 as part of its project on Improvements to International Accounting Standards. The project was undertaken in the light of queries and criticisms raised in relation to the Standards by securities regulators, professional accountants and
other interested parties. The objectives of the project were to reduce or eliminate alternatives, redundancies and conflicts within the Standards, to deal with some convergence issues and to make other improvements.
IN3 For IAS 16 the Board’s main objective was a limited revision to provide additional guidance and clarification on selected matters. The Board did not reconsider the fundamental approach to the accounting for property, plant and equipment contained in IAS 16.
IFRS amendments to IAS 16
The main changes
The main changes from the previous version of IAS 16 are described below.
Scope
This Standard clarifies that an entity is required to apply the principles of this Standard to items of property, plant and equipment used to develop or maintain (a) biological assets and (b) mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources. Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), issued in June 2014, amended the scope of
this Standard to include bearer plants related to agricultural activity.
Recognition: subsequent costs An entity evaluates under the general recognition principle all property, plant and equipment costs at the time they are incurred. Those costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service an item. The previous version of IAS 16 contained two recognition principles.
IFRS amendments to IAS 16
An entity applied the second recognition principle to subsequent costs. Measurement at recognition: asset dismantlement, removal and restoration costs .The cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of installing the item. Its cost also includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of using the item during a particular period for purposes other than to produce inventories during that period. The previous version of IAS 16 included within its scope only the costs incurred as a consequence of installing the item.
Measurement at recognition: asset exchange transactions.
IFRS amendments to IAS 16 An entity is required to measure an item of property, plant and equipment Depreciation: unit of measure Derecognition: derecognition date |
Objective
The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in
accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to them.
Scope
This Standard shall be applied in accounting for property, plant and equipment except when another Standard requires or permits a different accounting treatment.
This Standard does not apply to:
- property, plant and equipment classified as held for sale in accordance
with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. - biological assets related to agricultural activity other than bearer plants
(see IAS 41 Agriculture). This Standard applies to bearer plants but it does
not apply to the produce on bearer plants. - the recognition and measurement of exploration and evaluation assets
(see IFRS 6 Exploration for and Evaluation of Mineral Resources). - mineral rights and mineral reserves such as oil, natural gas and similar
non-regenerative resources.
IFRS amendments to IAS 16
However, this Standard applies to property, plant and equipment used to develop or maintain the assets described. An entity using the cost model for investment property in accordance with IAS 40 Investment Property shall use the cost model in this Standard for owned investment property.
IFRS amendments to IAS 16
Cakart.in provides India’s top IFRS faculty video classes – online & in Pen Drive/ DVD – at very cost effective rates. Get IFRS Video classes from www.cakart.in to do a great preparation for primary Student.