AASB 116 discusses the recognition and treatment of PPE and sets guidelines to be followed by companies which allow the users of financial statements in understanding the investment and changes to investments in a company’s PPE (AASB, 2015).
The standard defines PPE as tangible items that are held for production or supply of goods or services, for rent or administrative purposes and are anticipated to be used for a long period (AASB, 2015).
Recognition of PPE
As per AASB 116 (AASB, 2015), PPE can be recognized based on two conditions;
1. If it is likely that the future economic benefits will flow into the entity and
2. Can be measured reliably.
AASB 116 states that initially, PPE should be recognized at cost (Paragraph 15) and post recognition,
The standard defines PPE as tangible items that are held for production or supply of goods or services, for rent or administrative purposes and are anticipated to be used for a long period (AASB, 2015).
Recognition of PPE
As per AASB 116 (AASB, 2015), PPE can be recognized based on two conditions;
1. If it is likely that the future economic benefits will flow into the entity and
2. Can be measured reliably.
AASB 116 states that initially, PPE should be recognized at cost (Paragraph 15) and post recognition,