Property Plant and Equipment: Ricky Boy B. Leonardo
Property Plant and Equipment: Ricky Boy B. Leonardo
Property Plant and Equipment: Ricky Boy B. Leonardo
Property
Plant and
Equipment
(PAS 16)
BSMA 2-2
TECHNICAL KNOWLEDGE
It means that the cost of the Property, Plant and Equipment together with the
related accumulated depreciation shall be remove from statement of financial
position.
PAS 16, paragraph 67, provides the carrying amount of an item of PPE shall be
derecognized on disposal or when future economic benefits are expected from
the use of disposal.
Gains should be included in the revenue but treated as other income.
The gain or loss of PPE in disposal should be determined as the difference
between the net disposal proceeds and the carrying amount of the item.
Concepts of Depreciation
Depreciation is define as the systematic allocation of the depreciable
amount of an asset over the useful life
STRAIGHT LINE METHOD – constant charge over the useful life of he asset.
Considers the depreciation as a function of time rather than the function of
usage.
PRODUCTION METHOD – more on a function of usage than a function of time.
The useful life of an asset is considered in terms of the output it produces or
the number of hours it works.
DIMINISHINF BALANCE OR ACCELERATED METHOD – provide higher
depreciation in earlier years and lower depreciation in the later years. It
includes sum’s of the years method and double declining balance method.
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