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Non-current assets - Essay Example
Finance & Accounting
Pages 5 (1255 words)
Non-current assets Contents Introduction 3 Differences in accounting treatment 3 Conclusion 6 References 7 Introduction IAS 16 Property, Plant and Equipment analyze the treatment of accounting for most types of property, equipments as well as plants. Property, plant and equipment is preliminarily measured at its cost but successively measured using the revaluation or the cost model…
The effective date on the basis of IASB was the fiscal periods on or after the financial year ending on 2004. Differences in accounting treatment The accounting standard of IAS 16 refers to the tangible noncurrent assets as property, plant and equipment and identifies that they hold a physical substance which can be used for delivery of goods or services or for purposes of administration. The physical substances are expected to be in use for more than a single accounting period. There are some problems accrued to the definition (Friedrich and Friedrich, 2009). Freehold as well as leasehold land, plants and machinery and buildings are included in the PPE. The aim of the accounting standard is to lay down the treatment for accounting relating to recognition of assets, the willpower of the carrying amounts and the charges of depreciation as well as the loses that relates to them. The accounting standard should be followed in the accounting process for PPE as using another PPE requires the use of different treatment. A business should have the capability to recognize the associated risks and rewards correlated with the asset (Kelly, n.d. p. 1-3). The business controls the asset. The rewards are the custodies. The cost of risk and repairs are treated as costs. ...
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