1. Indian Accounting Standard (Ind AS) 16
PROPERTY, PLANT & EQUIPMENT

2. PPE Objective Scope Definitions Recognition Derecognition Disclosure 12
Objective
Scope 3 4
Definitions
Recognition 5 6
Derecognition
Disclosure

3. Furniture and fixtures
A Class of PPE
Land
Land & Properties
Machinery
Ship
Aircraft
Motor vehicles
Furniture and fixtures
Office equipment
Bearer plants

4. Objective Accounting Treatment for property, plant and equipment
Recognition of the assets
Determination of carrying amounts
Depreciation charges and Impairment
losses

5. Scope Standard shall be applied except :
Classified as Held for Sale in accordance with Ind AS 105
Non-current Assets Held for Sale and Discontinued Operations
Biological assets related to agricultural activity other than bearer plants
The recognition and measurement of exploration and evaluation assets
Non-regenerative resources, mineral rights and mineral reserves
Ind AS 17, Leases
Ind AS 40, Investment Property

6. Definitions Bearer Plant is Carrying amount is a living plant
used in the production or supply of agricultural produce
expected to bear produce for more than one period
has a remote likelihood of being sold as agricultural produce,
except for incidental scrap sales
Carrying amount is
the amount at which an asset is recognized
after deducting any accumulated depreciation and
accumulated impairment losses.

7. Cost is
amount of cash or cash equivalents paid
fair value of the other consideration given to acquire an asset
at the time of its a cquisition or construction
Depreciable amount
the cost of an asset
other amount substituted for cost
less its residual value
Depreciation
systematic allocation
amount of an asset over its useful life
Entity-specific value (ESV)
present value of the cash flows
an entity expects to arise from the continuing use of an asset
from its disposal at the end of its useful life
expects to incur when settling a liability

8. Fair value (Ind AS 113, Fair Value Measurement)
the price that would be
received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date
Impairment loss
Impairment loss=( carrying amount - recoverable amount)
Property, plant and equipment
Tangible items
Held for use in the production or supply of goods or services
For rental to others or for administrative purposes
Are expected to be used during more than one period
Recoverable amount
An asset’s fair value less costs to sell > value in use

9. Residual value
Currently Estimated Amount of Disposal of the asset – Estimated cost of disposal
Useful life
Period expected to be available for use
Number of production or similar units expected to be obtained

10. Recognition Cost of an Item of PPE
Shall be recognized if and only if :
Probable that future economic benefits associated with the item
the cost of the item can be measured reliably
Initial costs
Subsequent costs

11. Spare parts, stand-by equipment and servicing equipment are PPE, meet if and only if otherwise Inventory
It may be appropriate to aggregate individually insignificant items, such as moulds, tools and dies, and to apply the criteria to the aggregate value
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it.

12. an entity does not recognise in the carrying amount of an item of property, plant and equipment the costs of the day day-to-day servicing of the item
Parts of some items of property, plant and equipment may require replacement at regular intervals
A condition of continuing to operate an item of PPE may be performing regular major inspections for faults regardless of whether parts of the item are replaced (an aircraft )

13. Elements of cost + Purchase price + Import duties
+ Non-Refundable Purchase Taxes
+ Any costs directly attributable
+ Initial costs of dismantling and removing and Restoring
- Trade discounts and rebates

14. Directly Attributable :
costs of employee benefits
costs of site preparation
initial delivery and handling costs
installation and assembly costs
costs of testing
professional fees

15. Costs are not part of PPE :
Costs of opening a new facility
Costs of introducing a new product or service
Costs of conducting business in a new location
Administration and other general overhead costs

16. Self-Constructed Asset & Bearer plants
Using the same principles
as for an acquired asset
+ Ind AS 23, Borrowing Costs
if any

17. The cost of an item of property, plant and equipment held by a lessee under a finance lease is determined in accordance with Ind AS 17   One or more items of property, plant and equipment may be acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non monetary assets - is measured at fair value If not, is measured at the carrying amount of the asset given up

18. Measurement after recognition
Cost model
+ Cost of PPE
- Accumulated depreciation
- Impairment losses
Revaluation model
+ Revalued Amount of PPE
- Subsequent accumulated depreciation
- Subsequent accumulated impairment

19. Frequency of revaluations depends upon the changes in fair values of PPE
- Significant and
volatile changes in fair value necessitating Annual Revaluation
- Insignificant changes in fair value may be necessary, only every three or five years

20. REVALUATION OF PPE
PPE may be revalued on a rolling basis
provided revaluation of the class of assets
is completed within a short period
the revaluations are kept up to date
At the date of the Revaluation
If an item of property, plant and equipment
is revalued, the entire class of property,
plant and equipment to which that asset
belongs shall be revalued.
The gross carrying amount is adjusted in a
manner that is consistent with the
revaluation of the carrying amount of the
asset.

21. REVLUATION
If carrying amount is Increased
shall be recognised in other comprehensive income and accumulated under the heading of revaluation surplus
However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluationdecrease of the same asset previously recognised in profit or loss.
If carrying amount is Decreased
shall be recognised in profit or loss
However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in
respect of that asset

22. The effects of taxes on income
The effects of taxes on income, if any, resulting from the revaluation of property,plant and equipment are recognised and disclosed in accordance with Ind AS 12,Income Taxes

23. Depreciation Systematic Allocation
Cost of PPE
Useful
Life
Depreciation method
Depreciation charge

24. The depreciable amount of an asset shall be allocated on a systematic
basis over its useful life
The residual value and the useful life of an asset shall be reviewed at
least at each financial year-end and, if expectations differ from previous
estimates,the change(s) shall be accounted for as a change in an
accounting estimate in accordance with Ind AS 8, Accounting Policies,
Changes in Accounting Estimates and Errors
Depreciation is recognised even if the fair value of the asset exceeds its
carrying amount, as long as the asset’s residual value does not exceed its
carrying amount. Repair and maintenance of an asset do not negate the need
to depreciate it.
The depreciable amount of an asset is determined after deducting its residual
value.In practice, the residual value of an asset is often insignificant and
therefore immaterial in the calculation of the depreciable amount.
The residual value of an asset may increase to an amount equal to or greater
than the asset’s carrying amount. If it does, the asset’s depreciation charge is
zero unless and until its residual value subsequently decreases to an amount
below the asset’s carrying amount.

25. Depreciation does not cease when the asset becomes idle or is
retired from active use unless the asset is fully depreciated.
However, under usage methods of depreciation the depreciation
charge can be zero while there is no production
all the following factors are considered in determining the useful
life of an asset:
expected usage of the asset (expected capacity or physical output)
expected physical wear and tear
technical or commercial obsolescence arising from changes or
improvements
in production, or from a change in the market demand
legal or similar limits on the use of the asset
Land and buildings are separable assets and are accounted for separately, even when they are acquired together. With some exceptions, such as quarries and sites used for landfill, land has an unlimited useful life and therefore is not depreciated. Buildings have a imited useful life and therefore are depreciable assets. An increase in the value of the land on which a building stands does not affect the determination of the depreciable amount of the building.

26. If the cost of land includes the costs of site dismantlement, removal and restoration, that portion of the land asset is depreciated over the period of benefits obtained by incurring those costs
The depreciation charge for a period is usually recognised in profit
or loss. However, sometimes, the future economic benefits
embodied in an asset are absorbed in producing other assets. In
this case, the depreciation charge constitutes part of the cost of the
other asset and is included in its carrying amount.
For example, the depreciation of manufacturing plant and
equipment is included in the costs of conversion of inventories
(see Ind AS 2). Similarly, depreciation of property, plant and
equipment used for development activities may be included in the
cost of an intangible asset recognised in accordance with Ind AS
38, Intangible Assets

27. DEPRECIATION METHOD Straight Line – a constant charge over
useful life.
Diminishing Balance – a decreasing charge
over useful life
Sum of the units – charge based on
expected use or output
Review periodically and, if significant,
change method to reflect a change in
pattern of consumption of future
benefits. Account For an a change in
according estimate and adjust
depreciation charge for current and
future period.

28. Impairment
To determine whether an item of property, plant and equipment is impaired, an entity
applies Ind AS 36, Impairment of Assets. That Standard explains how an entity reviews the carrying amount of its assets, how it determines the recoverable amount of an asset, and when it recognises, or reverses the recognition of, an impairment loss.

29. Compensation for impairment
Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up shall be included in profit or loss when the compensation becomes receivable.
Impairments or losses of items of property, plant and equipment, related claims for or payments of compensation from third parties and any subsequent purchase or onstruction of replacement assets are separate economic events and are accounted for separately as follows:

30. impairments of items of property, plant and equipment are recognised in accordance with Ind AS 36;
derecognition of items of property, plant and equipment retired or disposed of is determined in accordance with this Standard;
compensation from third parties for items of property, plant and equipment that were impaired, lost or given up is included in determining profit or loss when it becomes receivable; and
the cost of items of property, plant and equipment restored, purchased or constructed as replacements is determined in accordance with this Standard.

31. Derecognition
The carrying amount of an item of property, plant and equipment shall be derecognised:
(a) on disposal; or
(b) when no future economic benefits are
expected from its use or disposal.
The gain or loss arising from the derecognition of
an item of property, plant and equipment shall be
included in profit or loss when the item is derecognised
(unless Ind AS 17 requires otherwise on a sale and
leaseback). Gains shall not be classified as revenue.
The gain or loss arising from the derecognition of an
item of property, plant and equipment shall be
determined as the difference between the net disposal
proceeds, if any, and the carrying amount of the item.

32. Disclosure
The financial statements shall disclose, for each class of property, plant and equipment:
the measurement bases used for determining the gross carrying amount;
(b) the depreciation methods used;
(c) the useful lives or the depreciation rates used;
(d) the gross carrying amount and the accumulated depreciation (aggregated
with accumulated impairment losses) at the beginning and end of the period; and
(e) a reconciliation of the carrying amount at the beginning and end of the period showing:

33. (i) Additions;
(ii) Assets classified as held for sale or included in a disposal
group classified as held for sale in accordance with Ind AS
105 and other disposals;
(iii) acquisitions through business combinations;
(iv) increases or decreases resulting from revaluations under
paragraphs 31, 39 and 40 and from impairment losses
recognised or reversed in other comprehensive income in
accordance with Ind AS 36;
(v) impairment losses recognised in profit or loss in accordance
with Ind AS 36;
(vi) impairment losses reversed in profit or loss in accordance
(vii) depreciation;
(viii) the net exchange differences arising on the translation of
the financial statements from the functional currency into a
different presentation currency, including the translation of a
foreign operation into the presentation currency of the reporting
entity; and
(ix) other changes.

34. The financial statements shall also disclose:
the existence and amounts of restrictions on title, and property, plant and equipment pledged as security for liabilities;
the amount of expenditures recognised in the carrying amount of an itemof property, plant and equipment in the course of its construction 
the amount of contractual commitments for the acquisition of property, plant and equipment; and
if it is not disclosed separately in the statement of profit and loss, the amount ofcompensation from third parties for items of property, plant and equipment that were impaired, lost or given up that is included in profit or loss

35. property, plant and equipment, such disclosure may arise from changes in estimates Ind AS 8 :
residual values;
the estimated costs of dismantling,
removing or restoring items of
property, plant and equipment;
(c) useful lives; and
(d) depreciation methods

36. MUST TO CONSIDER THESE IND AS
Ind AS 105, Non-current Assets
Ind AS 41, Agriculture
Ind AS 106, Exploration for and Evaluation of
Mineral Resources
Ind AS 17, Leases
Ind AS 40, Investment Property
Ind AS 102, Share-based Payment
Ind AS 113, Fair Value Measurement
Ind AS 36, Impairment of Assets
Ind AS 19, Employee Benefits
Ind AS 37, Provisions, Contingent Liabilities and
Contingent Assets
Ind AS 23, Borrowing Costs
Ind AS 12, Income Taxes
Ind AS 38, Intangible Assets
Ind AS 8, Accounting Policies, Changes in
Accounting Estimates and Errors

37. THANK YOU CA. Bhavesh Kumar Gupta +91 9889920616