1. DISCLOSURE
2. SCOPE & DEFINITION
2.1. -tells you if you're in the right standard
2.2. -tells you what dosen't qualify as PPE
2.3. -Actual definition of PPE
2.4. ASSET , TANGIBLE , MORE THAN 12 MONTHS OF ECONOMIC BENEFITS , USED FOR PRODUCTION or SERVICES or RENTALS or ADMIN
3. RECOGNITION
3.1. -if it does not meet recognition criterea it cannot be recorded as PPE
3.2. -even if it meets the definition criteria it still has to meet the recognition as well
3.3. 1. the business must derive some sort of economic benefit from it
3.4. 2. the cost of the asset must be reliably measurable
4. INITIAL MEASUREMENT
4.1. COST = purchase price + import duties + non refundable tax + trade discounts + rebates
4.2. COST must include all other costs incurred to get the asset to a place and condition to be used
4.3. COST must include the dismantling costs (eg ; mine)
4.4. vat vendor = refundable tax , non vat vendor = non refundable tax
4.5. KEY QUESTION "if the ppe item can function without the cost then it will not be included in the total cost
5. SUBSEQUENT MEASUREMENT
5.1. 2 methods of costing PPE
5.1.1. COST MODEL
5.1.1.1. Additions ( ADD VALUE) & depreciation (DECREASE VALUE) & impaiment (SIGNIFICANT DROP IN VALUE
5.1.1.2. Carrying amount = cost - acc dep - acc imp
5.1.2. REVALUATION MODEL
5.1.2.1. carrying amount = revalued amount - sebsequent acc depreciation - subsequent acc impairment (after revaluation
5.1.2.1.1. REVAL
5.1.2.1.2. IMPAIRMENT
5.2. all classes of PPE have to use the same measurement model
5.3. DEPRECIATION
5.3.1. 3 methods of depreciation
5.3.1.1. STRAIGHT LINE METHOD
5.3.1.1.1. depreciable amount / estimated useful life
5.3.1.1.2. depreciable amount = cost - risidual value
5.3.1.1.3. risidual value = scrap value that PPE will be sold for at the end of its useful life
5.3.1.2. DIMINISHING BALANCE METHOD
5.3.1.2.1. carrying amount x rate x months
5.3.1.2.2. measures based on how m uch of the asset is used
5.3.1.3. UNITS OF PRODUCTION
5.3.1.3.1. Cost x units produced in current FY / total units the PPE can produce over its useful life
5.3.1.3.2. DO NOT apportion for the months
5.3.1.4. SUM OF DIGITS
5.3.2. each major component of the asset needs to be depreciated seperately
5.3.3. depreciation only starts when the PPE iten is READY FOR USE
5.3.4. The systematic allocation of the depriciable amount of an asset of its estimated useful life
5.3.5. MUST reflect the pattern of usage
5.4. IMPAIRMENT
5.4.1. When carrying amount > recoverable amount
5.4.2. assess the indicators of impairment annually (eg ; damages, newer models)
6. DISPOSAL
6.1. When its sold / when its no longer used / when its trasfered out of PPE
6.1.1. gain / loss on disposal = proceeds - carrying amount recognised in P/L