Property Plants and Equipment LKAS 16 RANGAJEWA HERATH
![Property, Plants and Equipment (LKAS 16) RANGAJEWA HERATH B. SC. ACCOUNTANCY AND FINANCIAL MANAGEMENT(SP. Property, Plants and Equipment (LKAS 16) RANGAJEWA HERATH B. SC. ACCOUNTANCY AND FINANCIAL MANAGEMENT(SP.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-1.jpg)
![Definitions 2 �Property, plant and equipment are tangible items that: (a) are held for Definitions 2 �Property, plant and equipment are tangible items that: (a) are held for](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-2.jpg)
![Definitions 3 �Depreciation is the systematic allocation of the depreciable amount of an asset Definitions 3 �Depreciation is the systematic allocation of the depreciable amount of an asset](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-3.jpg)
![Definitions 4 �Cost is the amount of cash or cash equivalents paid or the Definitions 4 �Cost is the amount of cash or cash equivalents paid or the](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-4.jpg)
![Definitions 5 �Residual value of an asset is the estimated amount that an entity Definitions 5 �Residual value of an asset is the estimated amount that an entity](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-5.jpg)
![Definitions 6 �Useful life is: (a) the period over which an asset is expected Definitions 6 �Useful life is: (a) the period over which an asset is expected](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-6.jpg)
![Measurement at Recognition 7 �An item of property, plant and equipment that qualifies for Measurement at Recognition 7 �An item of property, plant and equipment that qualifies for](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-7.jpg)
![Examples of directly attributable costs 8 a) Costs of employee benefits arising directly Examples of directly attributable costs 8 a) Costs of employee benefits arising directly](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-8.jpg)
![Exercise 1 9 � A business imported a plant for its manufacturing factory. Purchase Exercise 1 9 � A business imported a plant for its manufacturing factory. Purchase](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-9.jpg)
![Measurement after Recognition 10 Cost Model After recognition as an asset, an item of Measurement after Recognition 10 Cost Model After recognition as an asset, an item of](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-10.jpg)
![Results of Revaluation 11 Revalued Amount > Carrying Amount = Revaluation Surplus Revalued Amount Results of Revaluation 11 Revalued Amount > Carrying Amount = Revaluation Surplus Revalued Amount](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-11.jpg)
![Exercise 2 12 � The following balances were extracted from ABC PLC. as at Exercise 2 12 � The following balances were extracted from ABC PLC. as at](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-12.jpg)
![Exercise 3 13 �A business purchased a plant for Rs. 3, 000 on 01. Exercise 3 13 �A business purchased a plant for Rs. 3, 000 on 01.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-13.jpg)
![Depreciation Adjustment at the date of revaluation 14 Either: Eliminate against the gross carrying Depreciation Adjustment at the date of revaluation 14 Either: Eliminate against the gross carrying](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-14.jpg)
![Exercise 4 15 �A business purchased a plant for Rs. 5, 000 on 01. Exercise 4 15 �A business purchased a plant for Rs. 5, 000 on 01.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-15.jpg)
![Revaluation Increase/Decrease 16 � Increase – Recognize in other comprehensive income and accumulated in Revaluation Increase/Decrease 16 � Increase – Recognize in other comprehensive income and accumulated in](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-16.jpg)
![Revaluation of Revalued PPE 17 First Time Second Time Accounting Treatment Surplus Recognized under Revaluation of Revalued PPE 17 First Time Second Time Accounting Treatment Surplus Recognized under](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-17.jpg)
![Depreciation Period and Depreciation Method 18 � Depreciable amount should allocate systematic basis over Depreciation Period and Depreciation Method 18 � Depreciable amount should allocate systematic basis over](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-18.jpg)
![Review of Deprecition Period and Depreciation Method 19 � Should review at least at Review of Deprecition Period and Depreciation Method 19 � Should review at least at](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-19.jpg)
![20 �Tutorial Exercises Rangajeewa Herath 20 �Tutorial Exercises Rangajeewa Herath](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-20.jpg)
- Slides: 20
![Property Plants and Equipment LKAS 16 RANGAJEWA HERATH B SC ACCOUNTANCY AND FINANCIAL MANAGEMENTSP Property, Plants and Equipment (LKAS 16) RANGAJEWA HERATH B. SC. ACCOUNTANCY AND FINANCIAL MANAGEMENT(SP.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-1.jpg)
Property, Plants and Equipment (LKAS 16) RANGAJEWA HERATH B. SC. ACCOUNTANCY AND FINANCIAL MANAGEMENT(SP. ) (HONS. ) (USJ) , MASTER OF BUSINESS ADMINISTRATION -PIM(USJ) SENIOR LECTURER, UNIVERSITY OF SRI JAYEWARDENEPURA
![Definitions 2 Property plant and equipment are tangible items that a are held for Definitions 2 �Property, plant and equipment are tangible items that: (a) are held for](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-2.jpg)
Definitions 2 �Property, plant and equipment are tangible items that: (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and (b) are expected to be used during more than one period. Rangajeewa Herath
![Definitions 3 Depreciation is the systematic allocation of the depreciable amount of an asset Definitions 3 �Depreciation is the systematic allocation of the depreciable amount of an asset](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-3.jpg)
Definitions 3 �Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. �Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Rangajeewa Herath
![Definitions 4 Cost is the amount of cash or cash equivalents paid or the Definitions 4 �Cost is the amount of cash or cash equivalents paid or the](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-4.jpg)
Definitions 4 �Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognized in accordance with the specific requirements of other Standards. Rangajeewa Herath
![Definitions 5 Residual value of an asset is the estimated amount that an entity Definitions 5 �Residual value of an asset is the estimated amount that an entity](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-5.jpg)
Definitions 5 �Residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. Rangajeewa Herath
![Definitions 6 Useful life is a the period over which an asset is expected Definitions 6 �Useful life is: (a) the period over which an asset is expected](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-6.jpg)
Definitions 6 �Useful life is: (a) the period over which an asset is expected to be available for use by an entity; or (b) the number of production or similar units expected to be obtained from the asset by an entity. Rangajeewa Herath
![Measurement at Recognition 7 An item of property plant and equipment that qualifies for Measurement at Recognition 7 �An item of property, plant and equipment that qualifies for](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-7.jpg)
Measurement at Recognition 7 �An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost. Rangajeewa Herath
![Examples of directly attributable costs 8 a Costs of employee benefits arising directly Examples of directly attributable costs 8 a) Costs of employee benefits arising directly](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-8.jpg)
Examples of directly attributable costs 8 a) Costs of employee benefits arising directly from the construction or acquisition of the item of property, plant and equipment; (b) Cost of site preparation; (c) Initial delivery and handling costs; (d) Installation and assembly costs; (e) Costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition (such as samples produced when testing equipment); and (f) Professional fees. Rangajeewa Herath
![Exercise 1 9 A business imported a plant for its manufacturing factory Purchase Exercise 1 9 � A business imported a plant for its manufacturing factory. Purchase](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-9.jpg)
Exercise 1 9 � A business imported a plant for its manufacturing factory. Purchase price of the machine is Rs. 1, 500, 000 and 5% trade discount was received from the buyer. Fright and insurance cost of bring the machine to Sri Lanka was Rs. 450, 000. Import duties and other taxes paid at the port was Rs. 350, 000. Local transport cost of Rs. 50, 000 was incurred to bring the plant to the factory. Rs. 5, 000 wages for laborers and Rs. 15, 000 professional fee for engineer was paid at the installation of the plant. Fire insurance policy is obtained for the plant and annual insurance premium paid is Rs. 55, 000. Prior to commence the commercial production, a test run was made by incurring Rs. 120, 000 cost. Items produced in this test run were sold for Rs. 45, 000 after incurring Rs. 5, 000 selling expenses. � Required: Calculate Cost of Plant which should be recognized in the financial statements. Rangajeewa Herath
![Measurement after Recognition 10 Cost Model After recognition as an asset an item of Measurement after Recognition 10 Cost Model After recognition as an asset, an item of](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-10.jpg)
Measurement after Recognition 10 Cost Model After recognition as an asset, an item of property, plant and equipment shall be carried at its cost less any accumulated depreciation. � Revaluation Model After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Rangajeewa Herath
![Results of Revaluation 11 Revalued Amount Carrying Amount Revaluation Surplus Revalued Amount Results of Revaluation 11 Revalued Amount > Carrying Amount = Revaluation Surplus Revalued Amount](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-11.jpg)
Results of Revaluation 11 Revalued Amount > Carrying Amount = Revaluation Surplus Revalued Amount < Carrying Amount = Revaluation Deficit Rangajeewa Herath
![Exercise 2 12 The following balances were extracted from ABC PLC as at Exercise 2 12 � The following balances were extracted from ABC PLC. as at](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-12.jpg)
Exercise 2 12 � The following balances were extracted from ABC PLC. as at 31. 03. 2015. � Land � Buildings � Motor vehicles Cost 600, 000 400, 000 800, 000 Acc. Depn. 100, 000 250, 000 These assets were revalued as follows � Land – 750, 000 Buildings - 450, 000 MV- 425, 000 Required: Prepare the necessary accounts to record the revelation and show income statement and statement of financial position extracts. Rangajeewa Herath
![Exercise 3 13 A business purchased a plant for Rs 3 000 on 01 Exercise 3 13 �A business purchased a plant for Rs. 3, 000 on 01.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-13.jpg)
Exercise 3 13 �A business purchased a plant for Rs. 3, 000 on 01. 04. 2012 and estimated a useful life of 8 years with a residual value of Rs. 600, 000. On 01. 04. 2014 this plant was revalued for Rs. 2, 520, 000. �Required: Prepare the necessary accounts to record the revelation and show income statement and statement of financial position extracts Rangajeewa Herath
![Depreciation Adjustment at the date of revaluation 14 Either Eliminate against the gross carrying Depreciation Adjustment at the date of revaluation 14 Either: Eliminate against the gross carrying](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-14.jpg)
Depreciation Adjustment at the date of revaluation 14 Either: Eliminate against the gross carrying value of the asset and the net value is restated to the revalued amount of the asset. Restate proportionately with the change in the gross carrying value of the asset so that carrying value after revaluation equals its revaluation amount. Rangajeewa Herath
![Exercise 4 15 A business purchased a plant for Rs 5 000 on 01 Exercise 4 15 �A business purchased a plant for Rs. 5, 000 on 01.](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-15.jpg)
Exercise 4 15 �A business purchased a plant for Rs. 5, 000 on 01. 04. 2012 and estimated a useful life of 10 years. On 01. 04. 2016 the company decided to revalue this plant and the market price of this type of new plant was Rs. 7 million. �Required: Prepare the necessary accounts to record the revelation and show income statement and statement of financial position extracts Rangajeewa Herath
![Revaluation IncreaseDecrease 16 Increase Recognize in other comprehensive income and accumulated in Revaluation Increase/Decrease 16 � Increase – Recognize in other comprehensive income and accumulated in](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-16.jpg)
Revaluation Increase/Decrease 16 � Increase – Recognize in other comprehensive income and accumulated in equity under the heading revaluation surplus. However, is recognized in profit or loss to the extent it reverses a revaluation decrease of the same asset previously recognized in profit or loss. � Decrease – Recognize in profit or loss. However, it recognized in other comprehensive income to the extent of any credit balance in the revaluation surplus in respect of that asset. Rangajeewa Herath
![Revaluation of Revalued PPE 17 First Time Second Time Accounting Treatment Surplus Recognized under Revaluation of Revalued PPE 17 First Time Second Time Accounting Treatment Surplus Recognized under](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-17.jpg)
Revaluation of Revalued PPE 17 First Time Second Time Accounting Treatment Surplus Recognized under Other Comprehensive Income and Accumulated in Revaluation Reserve Deficit Recognized as an expense in the Profit/ (loss) Surplus Deficit Reverse the previously recognized Surplus. Any excess over it , Recognized as an expense in the Profit/ (loss) Deficit Surplus Reverse the previously recognized Deficit. Any excess over it , recoded under Other Comprehensive Income and Accumulated in Revaluation Reserve. Rangajeewa Herath
![Depreciation Period and Depreciation Method 18 Depreciable amount should allocate systematic basis over Depreciation Period and Depreciation Method 18 � Depreciable amount should allocate systematic basis over](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-18.jpg)
Depreciation Period and Depreciation Method 18 � Depreciable amount should allocate systematic basis over its useful life. on a � Depreciation should begin when asset is available for use. � Depreciation method should reflect the pattern in which the asset’s economic benefits are consumed by the entity. If that pattern cannot be determined reliably, use straight line method. � Depreciation charge should be recognized in P/L unless it is included in the carrying value of another asset. Rangajeewa Herath
![Review of Deprecition Period and Depreciation Method 19 Should review at least at Review of Deprecition Period and Depreciation Method 19 � Should review at least at](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-19.jpg)
Review of Deprecition Period and Depreciation Method 19 � Should review at least at each financial year- end. � If the expected useful life is different from previous estimates, depreciation period should be changed. � If there is a significant change in the expected pattern of consumption of economic benefits from the asset, depreciation method should be changed. Rangajeewa Herath
![20 Tutorial Exercises Rangajeewa Herath 20 �Tutorial Exercises Rangajeewa Herath](https://slidetodoc.com/presentation_image/3ba28b886ba476e4cf1de3ae83fe352d/image-20.jpg)
20 �Tutorial Exercises Rangajeewa Herath
Lkas 16 presentation in sinhala medium
Lkas 10
Slfrf
Depreciation of equipment
Acquisition and disposition of property plant and equipment
Acquisition and disposition of property plant and equipment
Property, plant, and equipment and intangible assets are
Acquisition and disposition of property plant and equipment
Useful life of property plant and equipment
Net book value
Tangible asset note grade 11
Useful life of property plant and equipment
Journal entry for revaluation of assets
Intermediate accounting chapter 10
Ind as 16 property plant and equipment
Characteristics of flowering and non flowering plants
Sapratibandha daya and apratibandha daya
Physical and chemical properties
Vascular vs nonvascular plants
Non vascular plants
Photosynthesis equation