A restaurant maintains a base stock inventory of silverware and dishes in an unchanging amount. Additions to the stock are charged to expense. On average, the turnover of these items is two years. Is it appropriate to classify the dishes and silverware as property, plant and equipment?
Answer
Yes. They are tangible assets held for use in the supply of goods and services and are expected to be used for more than one period. They should not be included in current assets.
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Check the below link for an expert opinion on the subject in point 1.9 of the document. Though it is from Pakistan, but is in line with guidance available under IFRS.
Stores and spares inventory of the Company comprises cutlery, crockery, linen, other store items food and beverage, liquor and wine items in hand, which are valued at lower of cost or net realizable value. Cost is determined on First in first out basis. Circulating stock of crockery and cutlery is charged to the profit and loss account as consumption.
Unserviceable / damaged / discarded stocks and shortages observed at the time of physical verification are charged off to Profit & Loss Account.
Net realizable value is the estimated selling price in the ordinary course of the business, less estimated costs necessary to make the sale.
Inventory of food and beverage items in hand include items used for staff cafeteria and is charged to consumption, net of recoveries, when issued.
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I would go with Fixed asset precedences as it does not satisfy the conditions of Inventory. ie it is not for sale. It matches more with teh definition of Plant.
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