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PROVIDE IAS16 property plant and equipment nerits and demerits ?

PROVIDE IAS16 property plant and equipment nerits and demerits ?

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Expert Solution

IAS 16 property plant and equipment

IAS 16 is the accounting treatment for proper plant and equipment. The property plant and equipment initially measured at its cost subsequently measured either using a cost or revaluation model and depreciated so that the depreciable amount is allocated on systematic basis over it's useful life.

Merits

It determinee the price of fixed assets and also inherits the depreciation value which shows actual market value of the asset in the context with the life time .

In revaluation model under which the price of the fixed assets is determined every year with passage of time to know the exact value of fixed assets.

It makes it easy for accountants to carry out accounting process for the plant equipment and property

It is a  reliable and easy to follow and used world wide.

Demerits

It does not prescribe the unit of meassure for what constitutes plant property and equipment

There are different limitations in the standard that is applicable only to a specified class of plant property and equipment.

Inability to treat the cost of new facility or producing a new product as being capitalised

Not feasible for producing bearer plants.

It doesn't apply to develop or maintain the last three categories of assets

ekkarill92 answered 1 year ago
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