CA Madhumita Binani (Executive Accounts (SERVICE)) (389 Points)
28 May 2009Hi all,
Recently I studied IAS 16 Property, Plant and Equipment.
I found it to be much different from the related AS - 10. So i have created this commitee to discuss about the same as in how to implement this particular standard. I beleive there will be a great deal of problems faced in implementation of the standard.
I hope there will be active participation of the members on their perspective of implementation of the same.
Thanks & Regards,
CA Madhumita Binani.
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 28 May 2009
As for replacement of the spare parts, it says that capitalised the new one but DERECOGNISE THE OLD ONE. However the IAS does not specifically
The First and most important thing that I noticed was the elaboration of the spare parts.
The IAS says to charge the same to P/L A/c and if the expected usage is more than 1 yr or the same is in sonnection with a single item, it should be capitalized. This point is same as what we are following,
say whether the derecognition is to be done prospectively or retrospectively., but it leans more on the other side(i.e., the retrospective effect).
I wud like to have views of the members in regard to this.
Thanks and regards
CA Madhumita Binani
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 30 May 2009
Welcome....
But it is not just sharing my view... also about getting the views of the members...
Regards
CA Madhumita Binani
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 02 June 2009
Hey Madhumita.
What i found major problem.. in the segregation of assets.. because if we are selling assets as a bunch.. or any of the part is available in the market or i can say if any of the parts have there own market.. we need to segregate..
i must say our life will be hell after all this
Amit
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 02 June 2009
Exactly... That is a big problem... and for the big players... they may be holding P&M for very long periods, n must be replacing parts every few years... is it really possible for them to every time segreagate the component price...
Regards
Madhumita
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 02 June 2009
But one thing at the end of the day .. our demand will increase like any thing..hahahhaha
Amit
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 03 June 2009
Dats true... CA is by far the best profession... But still, there are some drawbacks which i think the people are looking upon a lot after the satyam scam....!!!
Any how... the members are requested to keep posting their views on IAS 16...
Thanks & Regards
Madhumita Binani
Isha Gupta
(Chartered Accountant)
(180 Points)
Replied 03 June 2009
Hello frndz,
I heard that as per IAS 16, a fixed asset is not to be capitalised as a whole rather every component is to be regognised seperately (unlike AS 10). Is it tue?
Dont you think it will lead to a chaos.
Regards
Isha
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 03 June 2009
Yes Isha that is very true... And thats the most important point of convergence to IFRS, as Fixed Asset are a very big oprtion of an entity's assets...!!
Regards
Madhu
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 03 June 2009
Yes Isha that is very true... And thats the most important point of convergence to IFRS, as Fixed Asset are a very big oprtion of an entity's assets...!!
Regards
Madhu
**Portion
Isha Gupta
(Chartered Accountant)
(180 Points)
Replied 03 June 2009
What are other possible challenges that we are going to face in its compliances. Also guide us about a way out.
CA Madhumita Binani
(Executive Accounts (SERVICE))
(389 Points)
Replied 03 June 2009
Also IAS 16 requires Annual Review of the remaining useful life of the assets and its residual value while as in AS 10, it is reviewed as per the management's decision (may or may not be on year-on-year basis...!!
So this also increases the workload on us as well as u auditors...!!
C.A Rohit Gambhir
(C.A)
(275 Points)
Replied 07 August 2009
Hi,
This is regarding Replacement Cost discussed above at reply 2 above. IAS 16 also provides for Capitalisation of New Cost and derecognition the old one just like AS 10. The issue has been addressed as follows :
This issue was partly addressed by an interpretation of the Standing Interpretations Committee (SIC) that permitted adding major overhaul or inspection costs to the original asset if an amount representing the major overhaul or inspection component of the original cost of the asset was separately identified on initial recognition and was separately depreciated, and thereby could be written out of the asset records.
C.A Rohit Gambhir
(C.A)
(275 Points)
Replied 07 August 2009
This is regarding query raised by Isha Gupta : IAS 16 Provides as follows : Each part of an item of property, plant, and equipment with a cost that is significant in relation to the whole shall be depreciated separately,
The above lines states that an items of PPE needs to be significant in relation to the cost of whole asset to be elegible for seprate identification.
CAclubindia
