How now to determine the initial cost of fixed assets according to IFRS. How to now determine the initial cost of fixed assets according to IFRS International Financial Reporting Standard IAS 16

Target

1. The purpose of this Standard is to specify the accounting treatment of property, plant and equipment so that users of financial statements can obtain information about an entity's investments in property, plant and equipment and changes in the composition of those investments. The main aspects of property, plant and equipment accounting are the recognition of assets, the determination of their carrying amounts, and the associated depreciation and impairment charges to be recognized.

Scope of application

2. This standard shall be applied to the accounting for property, plant and equipment unless another standard specifies or permits a different accounting treatment.

3. This standard does not apply to:

(a) property, plant and equipment classified as held for sale in accordance with IFRS 5 "Non-current assets held for sale and discontinued operations."

(as amended

(see text in previous editors)

(b) biological assets associated with agricultural activities, with the exception of fruit crops (see. IAS 41 "Agriculture"). This standard applies to fruit crops, but does not apply to products based on fruit crops.

(paragraph "(b)" as amended , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(see text in previous editors)

(c) recognition and measurement of exploration and evaluation assets (see para. IFRS 6 "Exploration and assessment of mineral reserves").

(as amended , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(see text in previous editors)

(d) rights to use subsoil and mineral reserves such as oil, natural gas and similar non-renewable resources.

However, this Standard applies to property, plant and equipment used to develop or operate the assets described in subparagraphs (b) - (d).

4. Other standards may require the recognition of a particular item of property, plant and equipment using an approach different from the approach provided by this standard. For example, IAS 17 A “lease” requires an enterprise to apply the transfer of risks and rewards as a criterion for recognizing a leased item as part of property, plant and equipment. However, in such cases, other aspects of the accounting procedure for fixed assets, including depreciation, are determined by the requirements of this standard.

5. An enterprise that applies the model of accounting for investment property at actual costs in accordance with IAS 40 "Investment property" must use the cost accounting model provided for in this Standard.

Definitions

6. The following terms are used in this standard with the meanings specified:

A fruit crop is a living plant that:

(paragraph introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(a) is used for the production or receipt of agricultural products;

(paragraph introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(b) is expected to bear fruit for more than one period; And

(paragraph introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(The definition of a fruit crop is discussed in more detail in paragraphs 5A - 5B IAS 41.)

(paragraph introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

Carrying amount is the amount at which an asset is recognized in financial statements after deducting accumulated depreciation and accumulated impairment losses.

Cost is the amount of cash and cash equivalents paid or the fair value of other consideration given to acquire an asset, at the time of its acquisition or during its construction, or, if applicable, the amount at which such asset was initially recognized. recognition in accordance with the specific requirements of other IFRSs, for example IFRS 2 "Share-based payments."

The depreciable amount is the actual cost of an asset or another amount that replaces the actual cost, less its residual value.

Depreciation of fixed assets is the systematic distribution of the cost of an asset over its useful life.

Entity-specific cost is the present value of the cash flows that an entity expects to receive from the continued use of an asset and from its disposal at the end of its useful life or to pay when settling a liability.

Fair value is 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. IFRS 13 "Fair value measurement").

(as amended by IFRS 13

(see text in previous editors)

An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.

Fixed assets are tangible assets that:

(a) are intended for use in the production or supply of goods and services, rental or administrative purposes;

(b) are expected to be used over more than one reporting period.

Recoverable amount is the greater of an asset's fair value less costs to sell or its value in use.

The residual value of an asset is the estimated amount that an entity would currently receive from disposal of the asset after deducting the estimated costs of disposal if the asset had already reached the end of its useful life and condition at the end of its useful life.

Useful life is:

(a) the period of time over which the asset is expected to be available for use by the entity; or

(b) the number of output or similar units that the entity expects to receive from the use of the asset.

Confession

7. The cost of an item of fixed assets shall be recognized as an asset only if:

(a) it is probable that future economic benefits associated with the item will flow to the entity;

(b) the cost of the item can be measured reliably.

(clause 8 as amended , approved By Order of the Ministry of Finance of Russia dated October 31, 2012 N 143n)

(see text in previous editors)

9. This standard does not specify the unit of measurement to be used for recognition, i.e. what exactly constitutes an object of fixed assets. Thus, professional judgment is required when applying recognition criteria to the specific situation of an enterprise. In some cases, it may be appropriate to aggregate individual minor items, such as templates, tools, and dies, and apply criteria to their aggregate value.

10. An entity shall measure all of its costs related to property, plant and equipment using this recognition principle as such costs are incurred. Such costs include costs incurred initially in connection with the acquisition or construction of an item of property, plant and equipment, as well as costs subsequently incurred in connection with the addition, partial replacement or maintenance of that item.

Initial costs

11. The acquisition of fixed assets may be carried out for security purposes or for environmental protection purposes. Although the acquisition of such items does not directly increase the future economic benefits from the use of a particular existing item of property, plant and equipment, it may be necessary for the enterprise to obtain future economic benefits from the use of other assets owned by it. Such items of property, plant and equipment may be recognized as assets because they provide the entity with future economic benefits from the use of the associated assets that exceed the benefits that would have been received if the assets had not been acquired. For example, a chemical industry enterprise can introduce new technologies for working with chemicals to ensure compliance with environmental requirements during the production and storage of hazardous chemicals; The associated modernization of production facilities is recognized as an asset because without it the enterprise cannot produce and sell chemical products. However, the resulting carrying amount of such asset and associated assets is subject to impairment testing in accordance with IAS 36 "Asset impairment."

Subsequent costs

12. According to the accounting principle set out in paragraph 7 , the enterprise does not recognize in the carrying amount of an item of property, plant and equipment the costs of day-to-day maintenance of the item. These costs are recognized in profit or loss as incurred. Routine maintenance costs consist primarily of labor and consumables, but may also include costs for minor component parts. The purpose of these costs is often described as "repair and routine maintenance" of an item of property, plant and equipment.

13. Elements of some fixed assets may require regular replacement. For example, a furnace requires relining after a set number of hours of use, and aircraft interiors, such as seats or galleys, must be replaced several times over the life of the fuselage. The acquisition of fixed assets may also be carried out in order to extend the intervals between periodic replacements, such as the replacement of internal partitions in a building, or in order to make a one-time replacement. According to the accounting principle set out in paragraph 7 , the enterprise must recognize in the carrying amount of an item of property, plant and equipment the costs of partial replacement of such an item at the time of occurrence, subject to compliance with the accounting principles. In this case, the carrying amount of the replaced parts is subject to derecognition in accordance with the provisions of this standard on write-off from the balance sheet (see. paragraphs 67 - 72).

14. A condition for continued operation of a fixed asset item (for example, an aircraft) may be regular large-scale technical inspections for defects, regardless of whether the elements of the item are replaced. When each major technical inspection is performed, the associated costs are recognized in the carrying amount of the item of property, plant and equipment as a replacement, subject to the recognition criteria being met. Any amount of previous technical inspection costs remaining in the carrying amount (as opposed to spare parts) is subject to derecognition. This occurs regardless of whether or not the costs associated with the previous technical inspection were indicated in the acquisition or construction transaction. If necessary, the amount of a preliminary estimate of the costs for an upcoming similar technical inspection can serve as an indicator of the amount of technical inspection costs included in the book value of the object at the time of its acquisition or construction.

Assessment upon recognition

15. An item of fixed assets subject to recognition as an asset is valued at cost.

Elements of cost

16. The cost of an item of fixed assets includes:

(a) the purchase price, including import duties and non-refundable purchase taxes, less trade discounts and refunds;

(b) any direct costs of getting the asset to the required location and bringing it into a condition necessary to operate in accordance with the intentions of management of the enterprise;

(c) a preliminary estimate of the costs of dismantling and removing an item of property, plant and equipment and restoring the natural resources on the site that it occupies, for which the entity incurs an obligation either when acquiring the item or as a result of its use for a specified period for purposes other than creation of inventories during this period.

17. Examples of direct costs are:

(a) employee benefit costs (as defined in IAS 19 "Employee benefits") directly related to the construction or acquisition of fixed assets;

(b) site preparation costs;

(d) installation and installation costs;

(e) the cost of verifying the proper functioning of the asset after deducting the net sales of items produced in the process of getting the asset to its destination and making it operational (for example, samples obtained during testing of equipment); And

(f) payments for professional services rendered.

18. The enterprise applies IFRS ( IAS ) 2 “Inventories” refers to the costs of fulfilling obligations to dismantle, remove an item and restore resources on the site it occupies, incurred during a specified period as a result of the use of the specified item to create inventory during that period. Liabilities for costs accounted for under IFRS ( IAS) 2 or IFRS ( IAS) 16 , are recognized and assessed in accordance with IFRS ( IAS ) 37 "Provisions, Contingent Liabilities and Contingent Assets."

19. Examples of costs not related to the cost of an item of fixed assets are:

(a) the costs of opening a new production complex;

(c) costs associated with conducting business in a new location or with a new category of customers (including costs of training personnel); And

(d) administrative and other general overhead costs.

20. The inclusion of costs in the book value of an item of fixed assets ceases when such an item is delivered to the required location and brought into a condition that ensures its functioning in accordance with the intentions of the management of the enterprise. Therefore, costs incurred in using or moving an item are not included in the carrying amount of that item. For example, the following costs are not included in the carrying amount of an item of property, plant and equipment:

(a) costs incurred during a period when a facility capable of operating as intended by management is not yet operational or is operating at less than full capacity;

(b) initial operating losses: for example, operating losses incurred in generating demand for the products produced by the facility;

21. Some operations are carried out in connection with the construction or development of an item of property, plant and equipment, but are not necessary to bring the item to the desired location and bring it into a condition that allows it to operate in accordance with management's intentions. These side operations may occur before or during construction or development activities. For example, income may be generated by using a construction site as a parking lot prior to construction work. Because incidental operations are not necessary to bring an asset to its desired location and condition so that it can be operated in accordance with management's intentions, the income and related expenses from such operations are recognized as profit or loss and included in related income and income items. consumption

22. The cost of an independently produced asset is determined on the basis of the same principles as the cost of an acquired asset. If an entity produces similar assets for sale in the ordinary course of business, the cost of that asset generally corresponds to the cost of producing the asset for sale (see IAS 2) . Accordingly, when determining such cost, internal revenues are excluded. Similarly, the cost of an asset does not include excess costs of raw materials and other resources, labor and other costs incurred in creating the asset on its own. IAS 23 “Borrowing Costs” establishes the criteria for recognizing interest as a component of the carrying amount of an independently produced item of property, plant and equipment.

22A. Fruit crops are accounted for in the same manner as items of property, plant and equipment created in-house until they are in the location and condition necessary to be used in accordance with management's intentions. Accordingly, the term "construction" in this standard should be considered to cover the activities necessary to grow fruit crops until they are in the location and condition necessary for their use in accordance with management's intentions.

(Clause 22A introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

Cost estimation

23. The cost of an item of fixed assets is the equivalent of the price subject to immediate payment in cash on the date of recording. When payment is deferred beyond normal credit terms, the difference between the immediate cash price equivalent and the total payment amount is recognized as interest over the installment period, unless such interest is capitalized in accordance with IAS 23.

24. It is possible to acquire one or more fixed assets in exchange for a non-monetary asset or assets, or in exchange for a combination of monetary and non-monetary assets. The following considerations apply to the simple exchange of one non-monetary asset for another, but they also apply to all exchanges described in the previous sentence. The cost of an item of property, plant and equipment is measured at fair value unless: (a) the exchange transaction has no commercial substance, or (b) neither the fair value of the asset received nor the fair value of the asset given up can be measured reliably. The acquired item is valued in this way even if the entity cannot immediately write off the transferred asset. If the acquired item cannot be measured at fair value, its cost is estimated based on the carrying amount of the transferred asset.

25. An entity determines whether an exchange transaction has commercial substance by taking into account the extent to which future cash flows are expected to change as a result of the transaction. An exchange operation has commercial content if:

(a) the pattern (risk, timing and magnitude) of the cash flows relating to the asset received is different from the pattern of cash flows relating to the transferred asset; or

(b) as a result of the exchange, the enterprise-specific value of that part of its activities affected by the transaction changes; And

For purposes of determining whether an exchange transaction has commercial substance, the enterprise-specific value of the portion of its activities affected by the exchange transaction must reflect the after-tax cash flows. The result of this analysis can be obvious even without the company carrying out detailed calculations.

26. The fair value of an asset can be measured reliably if(a) the variability within which a reasonable estimate of fair value can be made varies within an insignificant range for the asset, or(b) The likelihood of different estimates can be reasonably assessed within these limits and used in estimating fair value. If an entity is able to make a reliable estimate of the fair value of an asset received or given up, the fair value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset received is more readily apparent.

(Clause 26 as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

(see text in previous editors)

27. The cost of an item of fixed assets at the disposal of the lessee under a finance lease agreement is determined in accordance with IAS 17 Leases.

28. The book value of an item of fixed assets can be reduced by the amount of government subsidies in accordance with IAS 20 "Accounting for Government Grants and Disclosure of State Assistance."

Evaluation after recognition

29. As its accounting policy, an enterprise must choose either an accounting model based on actual costs according to paragraph 30 , or the revalued cost accounting model according to paragraph 31 and apply this policy to the entire class of fixed assets.

Actual cost accounting model

30. Once recognized as an asset, an item of property, plant and equipment shall be stated at cost less accumulated depreciation of property, plant and equipment and any accumulated impairment losses.

Revaluation accounting model

31. Once recognized as an asset, an item of property, plant and equipment whose fair value can be measured reliably is carried at a revalued amount, being the fair value of that item at the date of revaluation less subsequently accumulated depreciation and impairment losses. Revaluations should be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would have been determined using fair value at the end of the reporting period.

32 - 33. Excluded. - IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n.

(see text in previous editors)

34. The frequency of revaluation depends on changes in the fair value of fixed assets subject to revaluation. If the fair value of a revalued asset differs materially from its carrying amount, an additional revaluation is required. Some items of property, plant and equipment are characterized by significant and random changes in fair value, which necessitate annual revaluation. Such frequent revaluations are not required for items of property, plant and equipment whose fair value is subject to only minor changes. The need for revaluation of such objects may arise only once every 3 - 5 years.

35. After a revaluation of an item of property, plant and equipment, the carrying amount of such asset is adjusted to its revalued value. At the date of revaluation, the asset is accounted for in one of the following ways:

(a) the gross carrying amount is adjusted according to the result of the revaluation of the carrying amount of the asset. For example, the gross carrying amount may be restated based on observable market data, or it may be restated in proportion to the change in carrying amount. Accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after taking into account any accumulated impairment losses; or

(b) accumulated depreciation is deducted from the gross carrying amount of the asset.

The amount of the adjustment to accumulated depreciation of property, plant and equipment is part of the total increase or decrease in the carrying amount, which is subject to accounting in accordance with paragraphs 39 and 40.

(clause 35 as amended , approved By Order of the Ministry of Finance of Russia dated December 17, 2014 N 151n)

(see text in previous editors)

36. If a single fixed asset item is revalued, then all other assets belonging to the same class of fixed assets as this asset are also subject to revaluation.

37. A class of fixed assets is a group of fixed assets that are similar in terms of their nature and the nature of their use in the activities of the enterprise. Below are examples of individual classes of fixed assets:

(a) land;

(b) land and buildings;

(d) watercraft;

(e) aircraft;

(f) motor vehicles;

(g) furniture and built-in elements of engineering equipment;

(h) office equipment; And

(as amended , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(see text in previous editors)

(i) fruit crops.

(clause "(i)" introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

38. Revaluation of objects belonging to the same class of fixed assets is carried out simultaneously in order to avoid selective revaluation of assets and the reflection in the financial statements of amounts that represent a mixture of costs and values at different dates. However, a particular asset class may be revalued using a rolling schedule, provided that the revaluation of that asset class is carried out within a short period of time and the results are updated.

39. If the carrying amount of an asset increases as a result of a revaluation, the amount of the increase should be recognized in other comprehensive income and accumulated in equity under the heading “revaluation surplus”. However, such an increase shall be recognized in profit or loss to the extent that it reverses the amount of the revaluation decrease on the same asset previously recognized in profit or loss.

40. If the carrying amount of an asset is decreased as a result of revaluation, the amount of such decrease is included in profit or loss. However, the decrease must be recognized in other comprehensive income to the extent of the existing credit balance, if any, recorded in the revaluation surplus relating to the same asset. A decrease recognized in other comprehensive income reduces the amount accumulated in equity under the heading "revaluation surplus".

41. When an asset is derecognised, the increase in value from its revaluation included in capital in relation to an item of property, plant and equipment may be transferred directly to retained earnings. Thus, the increase in value from revaluation can be completely transferred to retained earnings when the asset ceases to operate or is disposed of. However, part of the revaluation surplus may be transferred to retained earnings as the asset is used. In such a case, the amount of surplus carried forward is the difference between the amount of depreciation calculated on the basis of the revalued carrying amount of the asset and the amount of depreciation calculated on the basis of the original cost of the asset. The transfer of the increase in value from revaluation to retained earnings is carried out without involving profit or loss accounts.

42. The tax effect (if any) arising from the revaluation of property, plant and equipment is recognized and disclosed in accordance with IAS 12 "Income taxes."

Depreciation of fixed assets

43. Each component of an item of fixed assets, the cost of which is a significant amount relative to the total cost of the item, is depreciated separately.

44. An entity allocates the amount initially recorded as part of an item of property, plant and equipment among its significant components and depreciates each such component separately. For example, it may be appropriate to depreciate the fuselage and engines of an aircraft separately, regardless of whether it is owned or is the subject of a finance lease. Similarly, if an entity acquires an item of property, plant and equipment under an operating lease in which it is the lessor, it may be appropriate to separately charge depreciation on the amounts recorded in the cost of the item that are attributable to the terms of the lease, whether they are favorable or unfavorable compared to market conditions.

45. The useful life and depreciation method of one significant component of an item of property, plant and equipment may be entirely consistent with the useful life and depreciation method of another significant component of the same item. Such components can be combined into groups when determining the amount of depreciation.

46. If an enterprise charges depreciation for certain components of a fixed asset item separately, then the rest of this item is also depreciated separately. The remainder of the object consists of components that are not individually significant. If plans for the use of specified components change, approximation methods may be required to provide depreciation for the remainder of the asset to provide a reliable reflection of the consumption pattern and/or useful life of its components.

47. An enterprise has the right to charge depreciation separately for components of an object, the cost of which is not significant in relation to the cost of the entire object.

48. The amount of depreciation expense for each period shall be recognized in profit or loss unless it is included in the carrying amount of another asset.

49. The amount of depreciation expense for a period is generally recognized in profit or loss. However, sometimes the future economic benefits embodied in an asset are transferred during the production process to other assets. In this case, the amount of depreciation is part of the cost of another asset and is included in its book value. For example, depreciation of production fixed assets is included in the cost of processing inventories (see. IAS 2) . Similarly, depreciation of property, plant and equipment used for development purposes may be included in the cost of an intangible asset accounted for in accordance with IAS 38 "Intangible assets".

Depreciable amount and depreciation period of fixed assets

50. The depreciable amount of an asset is subject to equal repayment over the useful life of this asset.

51. The residual value and useful life of an asset should be reviewed at least once at the end of each accounting year and, if expectations differ from previous accounting estimates, the changes should be accounted for as a change in accounting estimate in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors."

52. Depreciation on fixed assets is charged even if the fair value of the asset exceeds its book value, provided that the residual value of the asset does not exceed its book value. During repairs and routine maintenance of an asset, depreciation does not stop.

53. 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 is therefore immaterial when calculating depreciable cost.

54. The residual value of an asset may increase to an amount equal to or greater than its carrying amount. If this occurs, the depreciation charge for that asset is zero unless its residual value subsequently falls below its carrying amount.

55. Depreciation of an asset begins when it becomes available for use, that is, when its location and condition allow it to be used in accordance with management's intentions. The asset ceases to be depreciated on the earlier of the date it is transferred to assets held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 or the date the asset is derecognized. Accordingly, depreciation does not stop when the asset is idle or when the asset ceases to be in active use, unless the asset is fully depreciated. However, when using asset-based depreciation methods, the depreciation charge may be zero if the asset is not involved in the production process.

56. The future economic benefits embodied in an asset are consumed by the enterprise primarily through its use. However, other factors, such as obsolescence, commercial obsolescence and physical wear and tear when an asset is idle, often reduce the economic benefits that could be obtained from the asset. Accordingly, when determining the useful life of an asset, all of the following factors must be taken into account:

(a) the nature of the assets; intended use of the asset; utilization is estimated based on the design capacity or physical productivity of the asset;

(b) expected production and physical depreciation, which depends on production factors such as the number of shifts using the asset, the repair and routine maintenance plan, and the conditions for storing and servicing the asset during downtime;

(c) obsolescence or commercial obsolescence resulting from changes or improvements in the production process or from changes in market demand for the products or services produced by the asset. An expected future decrease in the selling price of products produced using an asset may indicate expected obsolescence or commercial obsolescence of the asset, which in turn may indicate a decrease in the future economic benefits embodied in the asset;

(as amended

(see text in previous editors)

(d) legal or similar restrictions on the use of assets, such as the expiration of relevant leases.

57. The useful life of an asset is determined in terms of the expected usefulness of the asset to the enterprise. An entity's asset management policy may provide for the disposal of assets after a specified time or after a certain proportion of the future economic benefits embodied in the asset have been consumed. Thus, the useful life of an asset may be shorter than its economic life. The estimated useful life of an asset is made using professional judgment based on the enterprise's experience with similar assets.

58. Land and buildings are separable assets and are accounted for separately, even if acquired together. With some exceptions, such as quarries and waste sites, land plots have an indefinite useful life and are therefore not subject to depreciation. Buildings have a limited useful life and are thus depreciable assets. An increase in the value of the land on which the building stands does not affect the determination of the depreciable amount for this building.

59. If the cost of a site includes the costs of dismantling, removing fixed assets and restoring natural resources on this site, then this part of the cost of the land asset is depreciated over the period of receipt of the benefits from such costs. In some cases, the land itself may have a limited useful life, in which case it is depreciated using a method that reflects the benefits derived from it.

Depreciation method

60. The depreciation method used should reflect the entity's expected pattern of consumption of the future economic benefits of the asset.

61. The depreciation method applied to an asset should be reviewed at least once at the end of each accounting year and, if there is a significant change in the expected consumption pattern of the future economic benefits embodied in the asset, the method should be changed to reflect that change in pattern. This change should be accounted for as a change in accounting estimate in accordance with IAS 8.

62. To pay off the depreciable amount of an asset over its useful life, various depreciation methods can be used. These include the straight-line method, the declining balance method, and the units of production method. The straight-line depreciation method for fixed assets is to charge a constant amount of depreciation over the useful life of the asset, if the residual value of the asset does not change. As a result of applying the declining balance method, the amount of depreciation charged over the useful life is reduced. The units of production method calculates depreciation based on expected use or expected output. The enterprise chooses the method that most accurately reflects the expected consumption pattern of the future economic benefits embodied in the asset. The chosen method is applied consistently from one accounting period to the next, unless there is a change in the pattern of consumption of these future economic benefits.

62A. It is not acceptable to use a depreciation method that is based on the revenue generated by the activities in which the asset is involved. Revenue generated by the activities in which the asset is engaged generally reflects factors other than the consumption of the economic benefits embodied in the asset. For example, revenue is affected by other resources and processes used, sales activities, and changes in sales volumes and prices. The price component of revenue may be affected by inflation, which has no bearing on how the asset is consumed.

(clause 62A introduced by amendments , approved By Order of the Ministry of Finance of Russia dated October 30, 2014 N 127n)

Impairment

63. To determine whether an item of property, plant and equipment has been impaired, an entity applies IAS 36 "Asset impairment." This standard explains how an entity tests the carrying amount of its assets, how it determines the asset's recoverable amount, and when it recognizes or reverses an impairment loss.

64. [Deleted]

Impairment compensation

65. Compensation provided by third parties in connection with the impairment, loss or transfer of items of property, plant and equipment is included in profit or loss when such compensation becomes receivable.

66. Impairment or loss of items of property, plant and equipment, related claims for compensation or payment of compensation by third parties, and any subsequent acquisition or construction of replacement assets constitute separate economic events and must be accounted for separately as follows:

(a) impairment of items of property, plant and equipment is recognized in accordance with IAS 36;

(b) write-off of items of property, plant and equipment that are no longer in active use or are to be disposed of is determined in accordance with this Standard;

(c) compensation provided by third parties in connection with the impairment, loss or transfer of items of property, plant and equipment is included in the calculation of profit or loss when it becomes due;

(d) the cost of items of property, plant and equipment restored, acquired or constructed for replacement purposes is determined in accordance with this Standard.

Derecognition

67. Recognition of the book value of an item of fixed assets is terminated:

(a) upon its disposal; or

(b) when no future economic benefits are expected from its use or disposal.

68. Income or expenses arising in connection with the write-off of an item of fixed assets are included in profit or loss when the item is written off (if IAS 17 does not contain different requirements for sale and leaseback). Profits should not be classified as revenue.

68A. However, if an entity regularly sells items of property, plant and equipment that it used for rental purposes to other parties in the ordinary course of business, the entity must transfer such assets to inventory at their carrying amount when they cease to be used for rental purposes and are held for sale. Income from the sale of such assets should be recognized as revenue in accordance with IAS 18 Revenue. IFRS 5 does not apply when assets held for sale in the ordinary course of business are transferred to inventories.

69. Disposal of an item of property, plant and equipment can occur in various ways (for example, by sale, conclusion of a finance lease or by donation). When determining the date of disposal of an object, the enterprise uses the criteria established IAS 18 to recognize revenue from the sale of goods. IAS 17 applies where the disposal occurs as a result of a sale and leaseback.

70. If, as stated in paragraph 7 According to the accounting principle, the enterprise includes in the book value of the fixed asset the cost of replacing part of the object, then it writes off the book value of the replaced part, regardless of whether this part was depreciated separately or not. If it is impracticable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement part as an indication of the value of the replaced part at the time it was acquired or constructed.

71. Income or expenses arising in connection with the write-off of an item of property, plant and equipment are determined as the difference between the net proceeds from disposal, if any, and the carrying amount of the item.

72. Consideration receivable on disposal of an item of property, plant and equipment is initially recognized at fair value. When payment related to an item of property, plant and equipment is deferred, the consideration received is initially recognized at the equivalent price, subject to immediate cash payment. The difference between the nominal value of the consideration and the equivalent price provided for immediate cash payment is recognized as interest income in accordance with IAS 18 , reflecting the effective profitability of a given receivable.

Information disclosure

73. The financial statements must disclose the following information for each class of property, plant and equipment:

(a) the basis used to measure the gross carrying amount;

(b) the methods of depreciation used;

(d) the gross carrying amount and accumulated depreciation of property, plant and equipment (together with any accumulated impairment losses) at the beginning and end of the reporting period;

(e) a reconciliation of the carrying amount at the beginning and end of the relevant period, showing:

(i) receipts;

(ii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with IFRS 5 , and other disposals;

(iii) acquisition due to a business combination;

(iv) increases or decreases in value arising from revaluation in accordance with paragraphs 31, 39 and 40 and impairment losses recognized or reversed in other comprehensive income in accordance with IAS 36;

(v) impairment losses included in profit or loss in accordance with IAS 36;

(vi) impairment losses reversed to profit or loss in accordance with IAS 36;

(vii) depreciation;

(viii) net exchange differences arising on the translation of financial statements from a functional currency into a presentation currency other than that currency, including the translation of the statements of a foreign operation into the presentation currency of the reporting entity;

(ix) other changes.

74. Financial statements should also disclose:

(a) the presence and magnitude of restrictions on ownership rights to fixed assets, as well as fixed assets pledged as security for the fulfillment of obligations;

(b) the amount of costs included in the carrying amount of an item of property, plant and equipment during its construction;

(d) the amount of compensation provided by third parties in connection with the impairment, loss or transfer of items of property, plant and equipment included in profit or loss, unless such amount is disclosed separately in the statement of comprehensive income.

75. The choice of depreciation method and the estimated useful life of assets are made on the basis of professional judgment. Accordingly, disclosure of adopted methods and estimated useful lives or depreciation rates provides users of financial statements with information to enable them to analyze management's policy choices and make comparisons with other entities. For similar reasons, the following must be disclosed:

(a) depreciation of property, plant and equipment during the period, whether recognized in profit or loss or as part of the cost of other assets;

(b) accumulated depreciation of property, plant and equipment at the end of the period.

76. According to IAS 8 An entity discloses the nature and effect of a change in accounting estimate that either has an effect in the current period or is expected to have an effect in subsequent periods. For property, plant and equipment, such disclosure may be required due to changes in estimates relating to:

(a) residual value;

(b) the estimated expected costs of dismantling, removing or restoring items of property, plant and equipment; IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n;

(see text in previous editors)

(e) for each class of property, plant and equipment revalued: the carrying amount that would have been recognized if the assets had not been accounted for using the cost model;

(f) the increase in value from revaluation, indicating the change during the reporting period and restrictions on the distribution of the specified amount among shareholders.

78. In addition to the information specified in paragraphs 73(e)(iv) - (vi) , in accordance with IAS 36 the enterprise discloses information about fixed assets that have become subject to impairment.

79. Users of financial statements may also find useful information about:

(a) the carrying amount of temporarily idle fixed assets;

(b) the gross carrying amount of fully depreciated property, plant and equipment in use;

(c) the carrying amount of property, plant and equipment that is no longer in active use and is not classified as held for sale in accordance with IFRS 5;

(d) if the cost model is used: the fair value of property, plant and equipment, if it differs materially from the carrying amount.

Accordingly, enterprises are encouraged to disclose these amounts.

Conditions of the transition period

80. Requirements of paragraphs 24 - 26 in relation to the initial measurement of an item of property, plant and equipment acquired in an asset exchange transaction should be applied prospectively to future transactions only.

80A. Document " Annual improvements IFRS, period 2010 - 2012" made changes to paragraph 35 . An entity shall apply this amendment to all revaluations recognized in annual periods beginning on or after the date of initial application of the amendment and in the immediately preceding annual period. An entity may also have the right, but not the obligation, to provide adjusted comparative information for earlier periods presented. If an entity presents unadjusted information for earlier periods, it must clearly identify the information that has not been adjusted, indicate that it was presented on a different basis, and explain that basis. IFRS 6 in respect of an earlier period, it shall apply those amendments in respect of such earlier period.

81B. IAS 1 Presentation of Financial Statements (2007 edition) amended the terminology used in International Financial Reporting Standards (IFRS). In addition, he made amendments to paragraphs 39, 40 and 73(e)(iv) . An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. If the company uses IAS 1 (as amended 2007) in respect of an earlier period, then the said amendments shall apply in respect of such earlier period.

81C. IFRS 3 (as amended in 2008) amended paragraph 44 . An entity shall apply the amendment for annual periods beginning on or after 1 July 2009. If the company uses IFRS 3 (as amended 2008) in respect of an earlier period, then the said amendments shall apply in respect of such earlier period.

81D. The publication of Improvements to IFRSs in May 2008 resulted in amendments to paragraphs 6 and 69 and adding paragraph 68A . An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. Early use is permitted. If an entity applies those amendments to an earlier period, it must disclose that fact and simultaneously apply the relevant amendments to IAS 7 "Cash Flow Statement."

81E. The publication of Improvements to IFRSs in May 2008 resulted in amendments to point 5 . An entity shall apply the amendment prospectively for annual periods beginning on or after 1 January 2009. Early application is permitted if the entity simultaneously applies the amendments to paragraphs 8, 9, 22, 48, 53, 53A, 53B, 54, 57 and 85B IAS 40 If an entity applies that amendment for an earlier period, it must disclose that fact.

81F. IFRS 13 , issued in May 2011, amended the definition of fair value, and paragraphs 26, 35 and 77 and deleted paragraphs 32 and 33 . An entity must apply these amendments when applying IFRS 13.

(clause 81F introduced by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

81G. Document " Annual improvements International Financial Reporting Standards 2009 - 2011, issued in May 2012, amended paragraph 8 . An entity shall apply this amendment retrospectively in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” for annual periods beginning on or after January 1, 2013. Early use is permitted. If an entity applies this amendment for an earlier period, it must disclose that fact. acceptable depreciation methods (amendments to International Financial Reporting Standards (IAS) 16 IAS) 38)", released in May 2014, made changes to paragraph 56 and added paragraph 62A . An entity shall apply these amendments prospectively for annual periods beginning on or after 1 January 2016. Early use is permitted. If an entity applies the amendments to an earlier period, it should disclose that fact.

(clause 81I introduced by amendments , approved By Order of the Ministry of Finance of Russia dated October 30, 2014 N 127n)

ConsultantPlus: note.

Item 81J, introductory In force for mandatory use by organizations from January 1, 2017, IFRS was introduced(IFRS) 15 , approved By Order of the Ministry of Finance of Russia dated January 21, 2015 N 9n.

81K. Document " Agriculture IAS) 16 and International Financial Reporting Standard (IAS) 41)", released in June 2014, introduced changes to paragraphs 3, 6 and 37 and added paragraphs 22A and 81L - 81M . An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Early use is permitted. If an entity applies those amendments to an earlier period, it must disclose that fact. An entity must apply these amendments retrospectively in accordance with IAS 8 , except for the situation described in paragraph 81M.

(Clause 81K introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

81L. In the reporting period in which the enterprise first applies the document " Agriculture : fruit crops (Amendments to the International Financial Reporting Standard (IAS) 16 and International Financial Reporting Standard (IAS) 41)", the enterprise is not obliged to disclose the quantitative information required paragraph 28(f) of IFRS ( IAS) 8, for the current period. However, the enterprise must provide the quantitative information required paragraph 28(f) of IFRS ( IAS) 8, for each previous period presented in the financial statements.

(Clause 81L introduced by amendments , approved By Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

81M. An entity may elect to measure an item that is a fruit crop at its fair value at the beginning of the earliest period presented in the financial statements for the reporting period in which the entity first applies the instrument. Agriculture : fruit crops (Amendments to the International Financial Reporting Standard (IAS) 16 and International Financial Reporting Standard (IAS) 41)" and use this fair value as the deemed cost of the item at that date. The difference between the previous carrying amount and the fair value shall be recognized in retained earnings at the beginning of the earliest period presented.

The document ceases to be valid on the territory of the Russian Federation in connection with the publication of IFRS (IAS) 16, which comes into force from the date of official publication on the official website of the Ministry of Finance of Russia and put into effect by Order of the Ministry of Finance of Russia dated December 28, 2015 N 217n.

INTERNATIONAL FINANCIAL REPORTING STANDARD (IAS) 16
"FIXED ASSETS"

Scope of application

2. This standard shall be applied to the accounting for property, plant and equipment unless another standard specifies or permits a different accounting treatment.

3. This standard does not apply to:

(a) property, plant and equipment classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

(b) biological assets associated with agricultural activities other than fruit crops (see IAS 41 Agriculture). This standard applies to fruit crops, but does not apply to products based on fruit crops.
(paragraph "(b)" as amended, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(c) recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Reserves).
(as amended, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(d) rights to use subsoil and mineral reserves such as oil, natural gas and similar non-renewable resources.

However, this Standard applies to property, plant and equipment used to develop or operate assets described in subparagraphs (b) to (d).

4. Other standards may require the recognition of a particular item of property, plant and equipment using an approach different from the approach provided by this standard. For example, IAS 17 Leases requires an entity to apply the transfer of risks and rewards as a criterion for recognizing a leased item as property, plant and equipment. However, in such cases, other aspects of the accounting procedure for fixed assets, including depreciation, are determined by the requirements of this standard.

5. An entity using the cost model for investment property in accordance with IAS 40 Investment Property must use the cost model provided for in this Standard.

Definitions

6. The following terms are used in this standard with the meanings specified:

A fruit crop is a living plant that:

(a) is used for the production or receipt of agricultural products;
(paragraph introduced by amendments, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(b) is expected to bear fruit for more than one period; And
(paragraph introduced by amendments, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(c) is remotely likely to be sold as agricultural produce, other than by-product sales as waste.
(paragraph introduced by amendments, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(The definition of a fruit crop is discussed in more detail in paragraphs 5A to 5B of IAS 41.)
(paragraph introduced by amendments, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

Carrying amount is the amount at which an asset is recognized in financial statements after deducting accumulated depreciation and accumulated impairment losses.

The depreciable amount is the actual cost of an asset or another amount that replaces the actual cost, less its residual value.

Depreciation of fixed assets is the systematic distribution of the cost of an asset over its useful life.

Fair value is 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 (see IFRS 13 Fair Value Measurement).

Fixed assets are tangible assets that:

(a) are intended for use in the production or supply of goods and services, rental or administrative purposes;

(b) are expected to be used over more than one reporting period.

Recoverable amount is the greater of an asset's fair value less costs to sell or its value in use.

Useful life is:

(a) the period of time over which the asset is expected to be available for use by the entity; or

(b) the number of output or similar units that the entity expects to receive from the use of the asset.

Confession

7. The cost of an item of fixed assets shall be recognized as an asset only if:

(a) it is probable that future economic benefits associated with the item will flow to the entity;

(b) the cost of the item can be measured reliably.

8. Items such as spare parts, standby equipment and auxiliary equipment are recognized in accordance with this IFRS if they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventories.
(clause 8 as amended, approved by Order of the Ministry of Finance of Russia dated October 31, 2012 N 143n)

Initial costs

Subsequent costs

12. According to the accounting principle set out in paragraph 7, the enterprise does not recognize in the book value of an item of fixed assets the costs of day-to-day maintenance of the item. These costs are recognized in profit or loss as incurred. Routine maintenance costs consist primarily of labor and consumables, but may also include costs for minor component parts. The purpose of these costs is often described as "repair and routine maintenance" of an item of property, plant and equipment.

13. Elements of some fixed assets may require regular replacement. For example, a furnace requires relining after a set number of hours of use, and aircraft interiors, such as seats or galleys, must be replaced several times over the life of the fuselage. The acquisition of fixed assets may also be carried out in order to extend the intervals between periodic replacements, such as the replacement of internal partitions in a building, or in order to make a one-time replacement. According to the accounting principle set out in paragraph 7, an enterprise must recognize in the carrying amount of an item of property, plant and equipment the costs of partial replacement of such an item at the time of occurrence, subject to compliance with the accounting principles. In this case, the carrying amount of the replaced parts is subject to derecognition in accordance with the provisions of this standard on write-off from the balance sheet (see paragraphs 67 - 72).

Assessment upon recognition

15. An item of fixed assets subject to recognition as an asset is valued at cost.

Elements of cost

16. The cost of an item of fixed assets includes:

(a) the purchase price, including import duties and non-refundable purchase taxes, less trade discounts and refunds;

(b) any direct costs of getting the asset to the required location and bringing it into a condition necessary to operate in accordance with the intentions of management of the enterprise;

17. Examples of direct costs are:

(a)employee benefit costs (as defined in IAS 19 Employee Benefits) directly attributable to the construction or acquisition of an item of property, plant and equipment;

(b) site preparation costs;

(d) installation and installation costs;

(f) payments for professional services rendered.

18. An entity applies IAS 2 Inventories to the costs of dismantling, removing and restoring the item incurred during a specified period as a result of using the item to create inventory during that period. . Liabilities for costs accounted for in accordance with IAS 2 or IAS 16 are recognized and measured in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

19. Examples of costs not related to the cost of an item of fixed assets are:

(a) the costs of opening a new production complex;

(b) costs associated with the introduction of new products or services (including costs of advertising and promotional activities);

(c) costs associated with conducting business in a new location or with a new category of customers (including costs of training personnel); And

(d) administrative and other general overhead costs.

(a) costs incurred during a period when a facility capable of operating as intended by management is not yet operational or is operating at less than full capacity;

(b) initial operating losses: for example, operating losses incurred in generating demand for the products produced by the facility;

22. The cost of an independently produced asset is determined on the basis of the same principles as the cost of an acquired asset. If an entity produces similar assets for sale in the ordinary course of business, the cost of that asset is normally the cost of producing the asset for sale (see IAS 2). Accordingly, when determining such cost, internal revenues are excluded. Similarly, the cost of an asset does not include excess costs of raw materials and other resources, labor and other costs incurred in creating the asset on its own. IAS 23 Borrowing Costs sets out criteria for recognizing interest as a component of the carrying amount of an independently produced item of property, plant and equipment.

Cost estimation

23. The cost of an item of fixed assets is the equivalent of the price subject to immediate payment in cash on the date of recording. When payment is deferred beyond normal credit terms, the difference between the immediate cash equivalent price and the total payment amount is recognized as interest over the installment period, unless such interest is capitalized in accordance with IAS 23 .

(a) the pattern (risk, timing and magnitude) of the cash flows relating to the asset received is different from the pattern of cash flows relating to the transferred asset; or

(b) as a result of the exchange, the enterprise-specific value of that part of its activities affected by the transaction changes; And

26. The fair value of an asset can be measured reliably if (a) the variability within the limits within which a reasonable estimate of fair value is made varies within insignificant amounts for that asset, or (b) the likelihood of different estimates within those limits can be reasonably estimated, and use it in estimating fair value. If an entity is able to make a reliable estimate of the fair value of an asset received or given up, the fair value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset received is more readily apparent.
(clause 26 as amended by IFRS 13, approved by Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

27. The cost of an item of fixed assets at the disposal of the lessee under a finance lease agreement is determined in accordance with IAS 17 “Lease”.

28. The carrying amount of an item of property, plant and equipment may be reduced by the amount of government grants in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

Evaluation after recognition

29. An entity shall select as its accounting policy either the cost model in accordance with paragraph 30 or the revalued cost model in accordance with paragraph 31 and apply that policy to the entire class of property, plant and equipment.

Actual cost accounting model

30. Once recognized as an asset, an item of property, plant and equipment shall be stated at cost less accumulated depreciation of property, plant and equipment and any accumulated impairment losses.

Revaluation accounting model

32 - 33. Excluded. - IFRS 13, approved. By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n.

(b) accumulated depreciation is deducted from the gross carrying amount of the asset.

(clause 35 as amended, approved by Order of the Ministry of Finance of Russia dated December 17, 2014 N 151n)

36. If a single fixed asset item is revalued, then all other assets belonging to the same class of fixed assets as this asset are also subject to revaluation.

(a) land;

(b) land and buildings;

(d) watercraft;

(e) aircraft;

(f) motor vehicles;

(g) furniture and built-in elements of engineering equipment;

(h) office equipment; And
(as amended, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

(i) fruit crops.
(clause “(i)” introduced by amendments approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

42. The tax effect (if any) arising from the revaluation of property, plant and equipment is recognized and disclosed in accordance with IAS 12 Income Taxes.

Depreciation of fixed assets

43. Each component of an item of fixed assets, the cost of which is a significant amount relative to the total cost of the item, is depreciated separately.

47. An enterprise has the right to charge depreciation separately for components of an object, the cost of which is not significant in relation to the cost of the entire object.

48. The amount of depreciation expense for each period shall be recognized in profit or loss unless it is included in the carrying amount of another asset.

49. The amount of depreciation expense for a period is generally recognized in profit or loss. However, sometimes the future economic benefits embodied in an asset are transferred during the production process to other assets. In this case, the amount of depreciation is part of the cost of another asset and is included in its book value. For example, depreciation of production property, plant and equipment is included in inventory conversion costs (see IAS 2). Similarly, depreciation of property, plant and equipment used for development purposes may be included in the cost of an intangible asset accounted for in accordance with IAS 38 Intangible Assets.

Depreciable amount and depreciation period of fixed assets

50. The depreciable amount of an asset is subject to equal repayment over the useful life of this asset.

51. The residual value and useful life of an asset should be reviewed at least once at the end of each reporting year and, if expectations differ from previous accounting estimates, the changes should be accounted for as a change in accounting estimate in accordance with IAS 8." Accounting Policies, Changes in Accounting Estimates and Errors."

55. Depreciation of an asset begins when it becomes available for use, that is, when its location and condition allow it to be used in accordance with management's intentions. The asset ceases to be depreciated on the earlier of the date it is transferred to assets held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 or the date the asset is derecognised. . Accordingly, depreciation does not stop when the asset is idle or when the asset ceases to be in active use, unless the asset is fully depreciated. However, when using asset-based depreciation methods, the depreciation charge may be zero if the asset is not involved in the production process.

(a) the nature of the assets; intended use of the asset; utilization is estimated based on the design capacity or physical productivity of the asset;

(d) legal or similar restrictions on the use of assets, such as the expiration of relevant leases.

Depreciation method

60. The depreciation method used should reflect the entity's expected pattern of consumption of the future economic benefits of the asset.

61. The depreciation method applied to an asset should be reviewed at least once at the end of each accounting year and, if there is a significant change in the expected consumption pattern of the future economic benefits embodied in the asset, the method should be changed to reflect that change in pattern. The change should be accounted for as a change in accounting estimate in accordance with IAS 8.

Impairment

63 To determine whether an item of property, plant and equipment is impaired, an entity applies IAS 36 Impairment of Assets. This standard explains how an entity tests the carrying amount of its assets, how it determines the asset's recoverable amount, and when it recognizes or reverses an impairment loss.

64. [Deleted]

Impairment compensation

(a) impairment of items of property, plant and equipment is recognized in accordance with IAS 36;

(b) write-off of items of property, plant and equipment that are no longer in active use or are to be disposed of is determined in accordance with this Standard;

(d) the cost of items of property, plant and equipment restored, acquired or constructed for replacement purposes is determined in accordance with this Standard.

Derecognition

67. Recognition of the book value of an item of fixed assets is terminated:

(a) upon its disposal; or

(b) when no future economic benefits are expected from its use or disposal.

68. Income or expenses arising from the disposal of an item of property, plant and equipment are included in profit or loss on disposal of the item (unless IAS 17 contains different requirements for sales and leasebacks). Profits should not be classified as revenue.

68A. However, if an entity regularly sells items of property, plant and equipment that it used for rental purposes to other parties in the ordinary course of business, the entity must transfer such assets to inventory at their carrying amount when they cease to be used for rental purposes and are held for sale. Gains from the sale of such assets should be recognized as revenue in accordance with IAS 18 Revenue. IFRS 5 does not apply when assets held for sale in the ordinary course of business are transferred to inventories.

69. Disposal of an item of property, plant and equipment can occur in various ways (for example, by sale, conclusion of a finance lease or by donation). When determining the date of disposal of an item, an entity uses the criteria specified in IAS 18 for recognizing revenue from the sale of goods. IAS 17 applies when the disposal occurs as a result of a sale and leaseback.

70. If, in accordance with the accounting principle set out in paragraph 7, an enterprise includes in the book value of an item of fixed assets the costs of replacing part of the item, then it writes off the book value of the replaced part, regardless of whether this part was depreciated separately or not. If it is impracticable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement part as an indication of the value of the replaced part at the time it was acquired or constructed.

72. Consideration receivable on disposal of an item of property, plant and equipment is initially recognized at fair value. When payment related to an item of property, plant and equipment is deferred, the consideration received is initially recognized at the equivalent price, subject to immediate cash payment. The difference between the nominal amount of the consideration and the cash equivalent price if paid immediately is recognized as interest income in accordance with IAS 18, reflecting the effective yield of the receivable.

Information disclosure

73. The financial statements must disclose the following information for each class of property, plant and equipment:

(a) the basis used to measure the gross carrying amount;

(b) the methods of depreciation used;

(d) the gross carrying amount and accumulated depreciation of property, plant and equipment (together with any accumulated impairment losses) at the beginning and end of the reporting period;

(e) a reconciliation of the carrying amount at the beginning and end of the relevant period, showing:

(i) receipts;

(ii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with IFRS 5 and other disposals;

(iii) acquisition due to a business combination;

(iv) increases or decreases arising from revaluations in accordance with paragraphs 31, 39 and 40 and impairment losses recognized or reversed in other comprehensive income in accordance with IAS 36;

(v) impairment losses included in profit or loss in accordance with IAS 36;

(vi) impairment losses reversed to profit or loss in accordance with IAS 36;

(vii) depreciation;

(ix) other changes.

74. Financial statements should also disclose:

(a) the presence and magnitude of restrictions on ownership rights to fixed assets, as well as fixed assets pledged as security for the fulfillment of obligations;

(b) the amount of costs included in the carrying amount of an item of property, plant and equipment during its construction;

(a) depreciation of property, plant and equipment during the period, whether recognized in profit or loss or as part of the cost of other assets;

(b) accumulated depreciation of property, plant and equipment at the end of the period.

76 IAS 8 requires an entity to disclose the nature and effect of a change in an accounting estimate that either has an effect on the current period or is expected to have an effect on subsequent periods. For property, plant and equipment, such disclosure may be required due to changes in estimates relating to:

(a) residual value;

(b) the estimated expected costs of dismantling, removing or restoring items of property, plant and equipment;

(d) depreciation methods.

77. If items of property, plant and equipment are stated at revalued amounts, the following information is required to be disclosed in addition to the disclosures required by IFRS 13:
(as amended by IFRS 13, approved by Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

(a) the date on which the revaluation was made;

(b) participation of an independent appraiser;

(e) for each class of property, plant and equipment revalued: the carrying amount that would have been recognized if the assets had not been accounted for using the cost model;

(f) the increase in value from revaluation, indicating the change during the reporting period and restrictions on the distribution of the specified amount among shareholders.

78 In addition to the information specified in paragraphs 73(e)(iv)–(vi), IAS 36 requires an entity to disclose information about property, plant and equipment that is impaired.

79. Users of financial statements may also find useful information about:

(a) the carrying amount of temporarily idle fixed assets;

(b) the gross carrying amount of fully depreciated property, plant and equipment in use;

(c) the carrying amount of property, plant and equipment that is no longer in active use and that is not classified as held for sale in accordance with IFRS 5;

(d) if the cost model is used: the fair value of property, plant and equipment, if it differs materially from the carrying amount.

Conditions of the transition period

80. The requirements in paragraphs 24 to 26 in relation to the initial measurement of an item of property, plant and equipment acquired in an asset exchange transaction shall apply prospectively to future transactions only.

80A. Document "Annual improvements to IFRS, period 2010 - 2012." amended paragraph 35. An entity shall apply this amendment to all revaluations recognized in annual periods beginning on or after the date of initial application of the amendment and in the immediately preceding annual period. An entity may also have the right, but not the obligation, to provide adjusted comparative information for earlier periods presented. If an entity presents unadjusted information for earlier periods, it must clearly identify the information that has not been adjusted, indicate that it was presented on a different basis, and explain that basis.
(Clause 80A was introduced by amendment, approved by Order of the Ministry of Finance of Russia dated December 17, 2014 N 151n)

Effective date

81 An entity shall apply this Standard for annual periods beginning on or after 1 January 2005. Early use is encouraged. If an entity applies this Standard for a period beginning before 1 January 2005, it must disclose that fact.

81A. An entity shall apply the amendments set out in paragraph 3 for annual periods beginning on or after 1 January 2006. If an entity applies IFRS 6 to an earlier period, it shall apply those amendments to that earlier period.

81B. IAS 1 Presentation of Financial Statements (as revised in 2007) amended the terminology used in International Financial Reporting Standards (IFRS). In addition, it amended paragraphs 39, 40 and 73(e)(iv). An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. If an entity applies IAS 1 (as amended 2007) to an earlier period, those amendments shall be applied to that earlier period.

81C. IFRS 3 (as amended in 2008) amended paragraph 44. An entity shall apply that amendment for annual periods beginning on or after 1 July 2009. If an entity applies IFRS 3 (as amended 2008) to an earlier period, those amendments shall be applied to that earlier period.

81D. The publication of Improvements to IFRSs in May 2008 amended paragraphs 6 and 69 and added paragraph 68A. An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. Early use is permitted. If an entity applies those amendments for an earlier period, it must disclose that fact and simultaneously apply the relevant amendments to IAS 7 Statement of Cash Flows.

81E. The publication of Improvements to IFRSs in May 2008 amended paragraph 5. An entity shall apply that amendment prospectively for annual periods beginning on or after 1 January 2009. Early application is permitted if an entity applies the amendments in paragraphs 8, 9, 22, 48, 53, 53A, 53B, 54, 57 and 85B of IAS 40 at the same time. If an entity applies that amendment for an earlier period, it must reveal this fact.

81F. IFRS 13, issued in May 2011, amended the definition of fair value and paragraphs 26, 35 and 77 and deleted paragraphs 32 and 33. An entity shall apply those amendments when it applies IFRS 13.
(clause 81F introduced by IFRS 13, approved by Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

81G. Annual Improvements to International Financial Reporting Standards 2009–2011, issued in May 2012, amended paragraph 8. An entity shall apply this amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Standards. Accounting Estimates and Errors" for annual periods beginning on or after 1 January 2013. Early use is permitted. If an entity applies this amendment for an earlier period, it must disclose that fact.
(Clause 81G was introduced by amendments approved by Order of the Ministry of Finance of Russia dated October 31, 2012 N 143n)

81H. Annual Improvements to IFRSs 2010–2012, issued in December 2013, amended paragraph 35 and added paragraph 80A. An entity shall apply this amendment for annual periods beginning on or after 1 July 2014. Early use is permitted. If an entity applies this amendment to an earlier period, it should disclose that fact.
(clause 81H was introduced by amendment, approved by Order of the Ministry of Finance of Russia dated December 17, 2014 N 151n)

81I. Clarification of Acceptable Depreciation Methods (Amendments to IAS 16 and IAS 38), issued in May 2014, amended paragraph 56 and added paragraph 62A. An entity shall apply these amendments prospectively for annual periods beginning on or after 1 January 2016. Early use is permitted. If an entity applies the amendments to an earlier period, it should disclose that fact.
(clause 81I was introduced by amendments, approved by Order of the Ministry of Finance of Russia dated October 30, 2014 N 127n)

81K. Agriculture: Fruit Crops (Amendments to IAS 16 and IAS 41), issued in June 2014, amended paragraphs 3, 6 and 37 and added paragraphs 22A and 81L - 81M. An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Early use is permitted. If an entity applies those amendments to an earlier period, it must disclose that fact. An entity shall apply those amendments retrospectively in accordance with IAS 8, except as described in paragraph 81M.
(clause 81K introduced by amendments approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

81L. In the reporting period in which an entity first applies Agriculture: Fruit Crops (Amendments to IAS 16 and IAS 41), the entity is not required to disclose the quantitative information required by paragraph 28( f) IAS 8, for the current period. However, an entity must provide the quantitative information required by paragraph 28(f) of IAS 8 for each prior period presented.
(Clause 81L was introduced by amendments approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

81M. An entity may elect to measure an item that is a fruit crop at its fair value at the beginning of the earliest period presented in the financial statements for the reporting period in which the entity first applies Agriculture: Fruit Crops (Amendments to International Financial Reporting Standards). IAS) 16 and International Financial Reporting Standard (IAS) 41)" and use this fair value as the deemed cost of the item at that date. The difference between the previous carrying amount and fair value should be recognized in retained earnings at the beginning of the earliest period presented.
(clause 81M introduced by amendments, approved by Order of the Ministry of Finance of Russia dated June 11, 2015 N 91n)

Termination of other documents

82 This Standard supersedes IAS 16 Property, Plant and Equipment (as amended in 1998).

83. This Standard supersedes the following clarifications:

(a) SIC - 6 "Costs of modifying existing software";

(b) RPC (SIC) - 14 "Fixed assets - compensation for impairment or loss of objects"; And

IFRS 16 (ias 16) Property, Plant and Equipment

We continue our series of articles about international financial reporting standards.

The subject of this article is IFRS 16 “Property, Plant and Equipment” (applicable for annual periods beginning on or after 01/01/2005).

Definitions

Before talking about what are fixed assets from the point of view of IFRS, it is worth mentioning that from the point of view of IFRS, fixed assets are not (clause 3; further in the text, paragraphs of IFRS 16 are indicated).

biological assets associated with agricultural activities;
rights to use subsoil and minerals.

So, property that belongs to fixed assets must have the following characteristics (clause 6):

used for the production or sale of goods (services), for rental to other companies or for administrative purposes;
it is intended to be used for more than one year.

It is possible that the company is creating an object that will subsequently be used as an investment property. While the object is at the construction stage, the procedure established by IFRS 16 is applied to it. Then, when the construction is completed and the object becomes investment property, it comes under the “guardianship” of another standard - IAS-40 “Investment property” (clause 5).

IFRS 16 has the concept of “useful life” (clause 6). This can be understood as:

first, the period of time over which the company intends to use the asset;
secondly, the quantity of products (or other units) that the firm expects to receive as a result of using the object.

The useful life of an object is established by the organization; IFRS does not impose any regulatory restrictions.

The standard does not establish what exactly is a unit of recognition, that is, what exactly constitutes an object of fixed assets (clause 9). This is decided by the accountant based on his or her professional judgment. For example,minor objects such as tools can be combined into a single object. A separate item is large spare parts and backup equipment if they are purchased for use for a period of more than one year. However, spare parts are usually treated as inventory.

Clause 6 of IFRS 16 provides a list of definitions, which we will now get acquainted with.

Cost is the amount of cash or cash equivalents (for example, marketable securities) paid or the fair value of other consideration given to acquire the asset at the time of its purchase or construction. That is, this is the cost of what you gave to purchase fixed assets. If the company paid 100,000 den. for the equipment. units, then this will be its initial cost.

Salvage value is the amount a company expects to receive for an asset if it sells it at the end of its expected useful life, less the estimated costs of disposing of the asset. For example, the company has established a useful life of 5 years for the purchased equipment. After this period, the company plans to sell it. She roughly imagines that equipment of this class, after a five-year period of intensive use, is sold on the secondary market for 27,000 den. units Costs associated with disposal (for example, intermediary services) will amount to 2000 den. units Then the liquidation value of the asset will be 25,000 den. units

When calculating the liquidation value, the company naturally proceeds from the price at which equipment with five years of “experience” is sold right now, at the time of its purchase. She cannot know how the situation on the secondary equipment market will develop in 5 years and how much this asset will actually cost. It is quite possible that it will not cost 27,000 den. units, as planned. But the company proceeds from the price at which the equipment would now be sold if at this moment it had reached five years of age.

If the company intends to use the property “to the last” or if the liquidation value is small, then it is considered equal to zero.

Depreciable cost is the original cost of an item of property, plant and equipment (or other estimate reflected in the financial statements) less its salvage value. If we continue talking about our equipment, the depreciable cost will be 75,000 den. units (100,000 monetary units - 25,000 monetary units). Only this amount can be written off by the company through depreciation.

Accordingly, in the first year of operation, depreciation will be 15,000 den. units (75,000 monetary units / 5 years).

Book (accounting) value is the actual cost at which an item of fixed assets is taken onto the balance sheet, minus accumulated depreciation and accumulated impairment losses. This means that at the end of the first year of use, to determine the book value, it is necessary to subtract the amount of accrued depreciation (15,000 monetary units) from the actual cost (in our case, 100,000 monetary units). As a result, we get 85,000 den. units

The previous paragraph mentioned the impairment loss. This is the amount by which the carrying amount of an asset exceeds its recoverable amount. Recoverable amount, in turn, is the greater of two values: net realizable value and value in use. This issue is addressed under IFRS 17 Impairment of Assets. But since the terms are mentioned in IFRS 16, let's try to understand this with an example.

Example. Let's assume that after the first year of use, the actual cost of the equipment was $85,000. units Since our reporting will be read by a third-party user who does not know the internal accounting registers, he will judge us only on the basis of the reporting. To deceive him in this case is a highly indecent act. What will we indicate on the balance sheet if the value of our equipment subsequently fell sharply? A neighboring company, which after some time bought exactly the same equipment, will show it on its balance sheet at a cost one and a half times less. We must determine how much money the use of our equipment will bring us. We have two options: sell or use (and then, possibly, sell). If we use this asset, it will bring us 60,000 den. units

How can we now determine the initial cost of fixed assets according to IFRS?

Then we will sell it, that’s another 5,000 den. units That is, the value in use will be 65,000 den. units (60,000 den. units + 5 den. units). If we sell it now, we will receive 55,000 den. units, sales costs will be 2000 den. units Therefore, the net selling price will be 53,000 den. units (55,000 monetary units - 2,000 monetary units). That is, we have a choice: to receive 65,000 den. from this asset. units or 52,000 den. units Both are possible, the choice is up to us. So, the recoverable amount is the greater of these values (so to speak, the more profitable use of the asset), that is, 65,000 den. units

Now we compare the recoverable amount (65,000 monetary units) with the carrying amount (85,000 monetary units). Can we declare that we own an asset of 85,000 den. units, while the most it can bring us is 65,000 den. units? This is not encouraged by international standards: we must show modesty and reflect the property on the balance sheet at a price of 65,000 den. units And the difference is 20,000 den. units and will be called an impairment loss.

In addition, IFRS 16 contains another very important definition.

Fair value is the amount of cash for which an asset could be exchanged in a transaction between parties:

well informed
interested,
independent from each other.

Valuation of fixed assets

When recognized as an asset, an item of fixed assets is subject to valuation at its original cost (clause 15). It includes (clauses 16 and 17):

the purchase price, including duties and non-refundable taxes;
the costs of getting the asset to the right place and bringing it into proper condition (for example, employee benefits in connection with the construction or acquisition of the asset, costs of delivery and unloading, installation and assembly, and verification of the proper operation of the asset);
an initial estimate of the costs of dismantling and removing the object and restoring natural resources on the site it occupies (if the organization assumes this responsibility).

But the costs of introducing a new product or service, the costs of conducting business activities in a new location, administrative and some other expenses are not included in the cost of the object (clause 19).

If a company creates an asset with its own resources (clause 22), then the initial cost includes the costs of materials, labor, other expenses related to the creation of the asset, and in some cases, interest on the loan. However, it may turn out that the original cost of the asset exceeded its fair (in fact, market) value. A company that has allowed some “overspending” of funds compared to those who create similar products and sell them on the market is still required to show the asset at fair value.

An item of fixed assets can be acquired in exchange for a non-monetary asset (clause 24) or a combination of monetary and non-monetary assets. The initial cost of such an item of property, plant and equipment is measured at fair value, except in two cases:

the exchange transaction is not of a commercial nature;
The fair value of either the asset received or transferred cannot be reliably measured.

If an item is not measured at fair value, its initial cost is measured at the carrying amount of the transferred asset.

In its accounting policies, an entity must choose one of two models for valuing an asset after recognition: either the historical cost model or the revaluation model. After which it is obliged to apply the selected accounting policy to the entire class of fixed assets (clause 29).

A class is a group of assets that are similar in purpose and nature of use. Examples of classes are given in paragraph 37:

land plots and buildings;
cars and equipment;
watercraft;
aircraft;
motor vehicles;
furniture and built-in elements of engineering equipment;
office equipment.

The historical cost accounting model (clause 30) provides that an item of property, plant and equipment should be accounted for at its historical cost less accumulated depreciation and accumulated impairment losses.

The revaluation model (paragraph 31) provides that an item of property, plant and equipment is accounted for at a revalued amount equal to its fair value at the date of revaluation, less subsequently accumulated depreciation and subsequently accumulated impairment losses. Revaluations must be made regularly to ensure that the carrying amount does not differ materially from the fair value at the reporting date. If it is not possible to measure an asset at fair value, it may be necessary to estimate fair value based on earnings or amortized replacement cost.

For example, the initial cost of the equipment was 100,000 den. units Assume that the salvage value is zero, so the original cost is fully depreciated. The useful life is 5 years. After 3 years, accumulated depreciation was 60,000 den. units (20,000 monetary units x 3 years). Accordingly, the carrying amount will be 40,000 den. units Based on the results of the revaluation, the market value is 90,000 den. units

If the book value increases, the amount of the revaluation is reflected as capital under the item “Gain from the revaluation of fixed assets” (clause 39). In our case, it will be equal to 50,000 den. units (90,000 monetary units - 40,000 monetary units).

If there is a decrease in the carrying amount of the item, the amount of the writedown is recognized in profit or loss. However, the loss must be debited to capital as a “revaluation gain” if there is a credit balance in the revaluation gain for the same asset (clause 40).

When an object is disposed of, the gain from revaluation, previously included in capital, can be transferred to retained earnings (clause 41), and in full. But, if the asset is still in use by the organization, only part of the increase can be transferred, namely the difference between the amount of depreciation calculated on the basis of the revalued book value of the asset and the amount of depreciation calculated on the basis of its original cost.

Let's continue our example. Remaining period of use is 2 years. Based on the book value before the revaluation, the annual depreciation expense would be 20,000. units (40,000 monetary units / 2 years). Based on the value after revaluation, annual depreciation charges will be 45,000 den. units (90,000 monetary units / 2 years). The difference between them annually will be 25,000 den. units (45,000 monetary units - 20,000 monetary units).

Depreciation

According to paragraph 43, each component of a fixed asset item, if its initial cost is significant in comparison with the total cost of the item, must be depreciated separately. Moreover, the organization distributes the amount into individual components and separately depreciates each such component (for example, you can separately depreciate the fuselage and engines of an aircraft).

Depreciation of an asset begins when it becomes available for use and stops when it is derecognized. If the asset is idle, depreciation does not stop (clause 55).

The useful life of an asset and its salvage value must be reviewed periodically (clause 50). This must occur at least at the end of each financial year.

Let's assume that an object with a depreciation cost of 100,000 den. units depreciated using the straight-line method. When an object is accepted for accounting, its useful life is set at 5 years. In the first year, depreciation charges amounted to 20,000 den. units, and the book value is 80,000 den. units A year later, it turned out that the useful life would be 3 years instead of 5 years, which means that in the future the object will have to be depreciated not for 4 years, but only for 2. The remaining cost is distributed over the new useful life. Next year, depreciation charges will be 40,000 den. units (80,000 monetary units / 2 years). In this case, previous periods are not adjusted.

Clause 62 lists the methods for calculating depreciation:

straight-line accrual method;
reducing balance method;
unit of production method.

As a rule, the chosen method is applied consistently from period to period. But it can be changed if there is a change in the estimated pattern of consumption of future economic benefits (clause 62). The depreciation method used is subject to review at least at the end of each financial year (clause 61).

The straight-line accrual method was discussed earlier.

Below we will look at two other methods.

Reducing balance method.

The equipment was purchased for 100,000 den. units The depreciation period is 4 years. That is, the depreciation coefficient will be 25%, but with this method the coefficient increases by 2 times and will be 50% (25% x 2).

the amount of depreciation is 100,000 den. units x 50% / 100% = 50,000 den. units

residual value - 50,000 den. units

(100,000 monetary units - 50,000 monetary units);

the amount of depreciation is 50,000 den. units x 50% / 100% = 25,000 den. units

residual value - 25,000 den. units

(50,000 monetary units - 25,000 monetary units);

the amount of depreciation is 25,000 den. units x 50% / 100% = 12,500 den. units

residual value - 12,500 den. units

(25,000 monetary units - 12,500 monetary units);

the amount of depreciation is 12,500 den. units x 50% / 100% = 6250 den. units

the remaining amount is written off - 6250 den. units

Units of production method.

Equipment was purchased for 150,000 den. units, useful life is 5 years, the company plans to use the equipment 300 shifts per year. The equipment will allow you to produce 100 products per shift. Thus, the approximate production rate for this equipment is 3000 products per year.

The annual depreciation rate will be:

150,000 den. units / 5 years = 30,000 den. units in year.

Depreciation charges per product will be:

30,000 den. units / 3000 items = 10 den. units

During the year, depreciation is charged in proportion to the number of products produced.

Another option can be used. Let's assume that you purchased equipment worth 150,000 den. units, calculated according to the supplier’s technical documentation for 50,000 products. Assume that the salvage value is zero. We calculate the ratio of cost to quantity of products produced:

150,000 den. units / 30,000 items = 3 den. units for one product.

The amount of accrued depreciation will be determined as the product of the number of products by 3 days. units

If 3,000 items are produced, depreciation will be 9,000 den. units (3000 items x 3 den. units).

Accrued depreciation is an expense of this period (if it is not absorbed in the production of other assets) (clause 48).

Derecognition of an asset

Recognition of the carrying value of the object is terminated (clause 67):

upon departure;
if no future economic benefits are expected from its operation or disposal.

A gain or loss may arise from derecognition (paragraph 68).

Information disclosure

In the financial statements for each type of fixed assets, the company is required to disclose the following information (clause 73):

estimates for calculating gross book value;
depreciation methods used;
useful lives or depreciation rates;
gross book value and accumulated depreciation at the beginning and end of the period;
breakdown of the book value as of the beginning and end of the period (receipts, disposals, acquisitions as a result of business combinations, increases or decreases in value as a result of revaluations, impairment losses, exchange differences, etc. are reflected).

In addition, restrictions on property rights and the value of fixed assets pledged, the amount of expenses for unfinished construction, the amount of contractual obligations for the acquisition of fixed assets, etc. are disclosed.

O.A. Bukina

chief auditor

"Audit-Standard"

www.accountingreform.ru

PREFACE

Here is an updated version of the training manual prepared by a group of project specialists "Accounting and reporting reform", which is carried out in the Russian Federation with the support of the European Union.

This series focuses on the principles of International Financial Reporting Standards (IFRS). The manuals are intended as a series of materials for professional accountants who wish to independently acquire additional knowledge, information and skills.

Each collection is designed for no more than three hours of lessons.

Collection structure:

Information and examples
Self-control questions and exercises (multiple choice)
Key to self-control questions

The project is carried out by employees of the companies ZAO PricewaterhouseCoopers Audit, FBK, Agroconsulting and ACCA.

A list of all collections in the series can be found on the project's website.

The project working group expresses gratitude to everyone who participated in the preparation of the series.

Contact Information:

Russia, Moscow, February 2007 (updated edition).

1 Introduction 3

2 Definitions 4

3 Recognition of fixed assets 7

4 Valuation at the time of recognition 8

5 Follow-up assessment 10

6 Depreciation 14

7 Impairment 20

8 Disclosure 22

9 Questions for self-control (multiple choice) 24

10 Questions with calculations 28

11 Answers to questions 28

12. Answers to questions with calculations 29

Introduction

The difference between capital costs (including the cost of purchasing fixed assets) and operating costs is very significant from an accounting point of view. Typically, current costs are taken into account in the reporting period (excluding deferred expenses), and capital costs are distributed over several reporting periods to which these capital costs relate. One way of looking at depreciation is that it represents the allocation of capital costs between accounting periods.

Target

The purpose of this manual is to help specialists study the methodology for accounting for fixed assets in accordance with IFRS requirements.

Task

Property, plant and equipment are covered in IAS 16 Property, Plant and Equipment.

The purpose of this Standard is to:

q determine the accounting procedure for fixed assets; And

q inform users of financial statements about investments in property, plant and equipment and any movements in property, plant and equipment during the reporting period.

The main issues in the field of fixed asset accounting are:

q recognition of fixed assets in accounting and reporting;

q determination of their book value;

q depreciation charges; And

q impairment losses to be recorded.

Scope of application

This Standard shall be applied to the accounting for property, plant and equipment unless another International Financial Reporting Standard requires or permits a different accounting treatment.

IAS 16 does not apply to:

(1) biological assets related to agricultural activities (see Art.

IAS 41 Agriculture); and

(2) property, plant and equipment classified as held for sale in accordance with IFRS 5;

(3) does not apply until the initial recognition of the asset as an asset for exploration and evaluation of mineral resources

(see IFRS 6) or

(4) mineral rights and mineral reserves such as oil, natural gas and similar non-renewable resources.

However, this Standard applies to property, plant and equipment used to develop or support activities or related to the use of assets specified in paragraphs (1) through (4) above.

Rent

Other Standards may require a different approach to the recognition of property, plant and equipment than IAS 16. For example, IAS 17 Rent requires that the recognition and measurement of a leased asset be approached from a transfer of risks and rewards perspective. Other accounting aspects for leased assets, including depreciation, are prescribed by this Standard.

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Ministry of Agriculture of the Russian Federation

Department of Science and Technology Policy and Education

Federal state budget

educational institution

Higher professional education

"Krasnoyarsk State Agrarian University"

Institute of Economics and Finance of Agro-Industrial Complex

Department__________________________

__________________________

International accounting and financial reporting standards.

(name of the discipline)

TEST

“IFRS 16 “Fixed Assets””

Completed

student of group ______________

(signature)

(Academic title, degree, or position) _______________ (signature)

Krasnoyarsk 2012

Introduction…………………………………………………………..……3

Recognition of fixed assets………………………………………….……5
Initial cost of fixed assets…………………….…6
Purchase of fixed assets with deferred payment………….….9
Production of fixed assets for sale……………….……..11
Suspension of construction of fixed assets….………12
Costs for decommissioning fixed assets……….……13
Acquisition of fixed assets through non-monetary exchange....15

Conclusion………………………………………………………16

List of references……………………………….17

Introduction

Standard IAS 16 “Property, machinery and equipment” (hereinafter referred to as fixed assets) defines fixed assets as non-current tangible assets, highlighting two of their main characteristics:

1) their purpose is use in production and for the supply of products (goods) or provision of services, rental to persons third party to the company or solution of administrative tasks;

2) the expected duration of their use - more than one reporting period.

Thus, fixed assets include material resources that are used for a long time (but not consumed at a time). Based on this, spare parts, auxiliary, reserve equipment used in direct connection with the operation of fixed assets are qualified by IFRS as inventories (that is, tangible current assets) if their expected life does not exceed one reporting period.

Attention should be paid to the fact that the Standard, while defining fixed assets, does not stipulate the legal status of the objects. This means that the definition includes all objects owned by the organization that have the specified characteristics, regardless of whether the organization has ownership rights to them or whether they were received under a lease or trust management agreement.

Most of the complex issues of accounting for non-current assets are related to the correct measurement of their value and determining the moment when an asset is accepted for accounting. In resolving these issues, according to the requirements of IFRS, it is necessary to take into account, first of all, the economic essence of the transaction and the nature of the expected participation of the object accepted for accounting in the company’s activities. In general, according to IFRS, an asset is an object that generates income for a company. How an object will generate income for the company determines its qualification for recognition - the asset item under which it will be reflected in the financial statements. This general rule finds direct application in accounting for fixed assets, which, depending on the nature of their participation in the economic life of the company, can be classified as different accounting objects belonging to the same group. At the same time, the procedure for accounting for fixed assets is determined by the private requirements of the relevant standards, which apply to certain classes of fixed assets - own, leased, investment real estate, etc. For example, reflection in the financial statements of a building owned by an organization on a lease basis, which is subleased , is determined by the standards of IAS 40 "Investment Property".

Thus, an object that meets the definition of fixed assets may be recognized in the balance sheet under the item “fixed assets” (own and leased), “investment property”, “non-current assets held for sale” or not be included in these items at all, then is taken into account "behind the balance sheet". In the latter case, only unfinished payments for the right to use existing fixed assets will be reflected in the balance sheet.

Recognition of fixed assets

In accordance with paragraph 7 of IAS 16, an item of property, plant and equipment is recognized if and only if it is probable that the future economic benefits associated with the item will flow to the entity and its cost can be measured reliably. Thus, the general criteria for recognizing fixed assets do not differ from the criteria for recognizing assets as such. In other words, the basis for inclusion in the balance sheet of an organization under one or another item of tangible non-current assets is the compliance of the object with the definition of fixed assets of a certain group and the criteria for asset recognition, according to which almost all the risks and benefits of the owner (but not always the ownership right itself) have passed to organizations.

In some cases, organizations acquire fixed assets in order to ensure safe working conditions or preserve the environment. The use of such assets, as a rule, does not directly lead to an increase in economic benefits, but may be necessary for the organization to obtain economic benefits from the use of other assets. Since such fixed assets indirectly ensure that the organization receives future economic benefits from existing assets, they meet the appropriate recognition criterion. As an example, the Standard considers a situation where a chemical company recognizes as part of its fixed assets equipment that ensures compliance with environmental standards in the production and storage of hazardous chemicals, since without them the company cannot produce and sell chemicals.

Initial cost of fixed assets

Fixed assets that an organization purchased for a fee or manufactured (built) independently, according to IFRS, must be accounted for at their cost, which includes the purchase price (taking into account import duties and non-refundable taxes), all costs directly related to bringing the asset into a state ready for its intended use, that is, in the mode planned by the organization’s management. Thus, in the amount of the initial cost of fixed assets, all direct costs of the company (labor, material and others) to obtain fixed assets for its own needs are capitalized. For example, the cost of compensation to employees (directly involved in the construction or acquisition of an item of property, plant and equipment) in any form, including share-based or in-kind payments, is a cost directly attributable to the item and is included in its initial cost.

However, direct costs are only part of the costs that form the initial cost of fixed assets. There are different approaches to accounting for indirect costs that qualify as capitalizable, that is, those that must be included in the initial cost of fixed assets. At the same time, the decision on the division of indirect costs into those related to the costs of creating an asset and included in general administrative expenses, which, in accordance with IFRS, are accounted for as expenses of the current reporting period, is within the scope of professional judgment.

At the same time, paragraph 19 of the Standard specifically indicates costs that are prohibited from being capitalized in the cost of fixed assets. First, there are “the costs associated with opening new production facilities.” So, for example, if an organization plans to open a store under the terms of an operating lease of the premises, but cannot begin work on remodeling the store until it receives the appropriate ownership rights to this store, then rental payments incurred during the period of renovation should be attributed for expenses as they arise.

IAS 16 Property, Plant and Equipment

Also, the expenses of the reporting period should include (decapitalize): "costs of introducing a new product or service (including costs of advertising and promotion); costs of introducing business activities in a new location or with a new category of clients (including costs of training and education of personnel )". For example, start-up and preparatory costs, in particular in connection with obtaining permission to do business in another region or city, are not included in the initial cost of the fixed assets being placed, as well as the costs of performing a feasibility study for making a decision to invest in construction or the purchase of any object is not included in its price.

All these are examples of general costs that are not directly related to preparing the facility for operation. In addition, if installation work, say, of some equipment is carried out by a contractor, and the total cost of the relevant work includes the cost of training the customer organization’s personnel to work on this equipment, then training costs should be allocated from the total installation cost, which should be recognized expenses as they arise. “Administrative and other general overhead costs” do not increase the initial cost of fixed assets.

Costs incurred in the process of using or relocating an item of fixed assets do not increase the book value of this item.

For example, in accordance with paragraph 20 of the Standard, the book value of an item of fixed assets does not include:

“costs incurred during a period when a facility capable of functioning in accordance with the intentions of the management of the organization is not yet in use or is not operating at full capacity;

initial operating losses incurred, for example, as demand for products produced by the facility increases; And

costs for partial or complete relocation or reorganization of the company's activities."

In some cases, fixed assets that are completely ready for use are not operated at the initial stages or do not operate at the full planned load. This may be due to technological or organizational features of the production process, unforeseen delays in putting the facility into operation. Then the organization may incur temporary losses, and such losses are not subject to capitalization. For example, when, in the case of purchasing and installing new equipment for the production of a new soft drink, the organization does not operate it in full, due to a delay in the process of training personnel to operate this equipment. In addition, it is possible that the new product produced on this equipment has not yet found wide enough distribution. It is possible that during the construction of a building, the management of the organization decides to change the purpose of the building. For example, during the construction of a dispensary, the developer decides to create a fitness center in the building under construction. Then the previously incurred costs for designing the equipment of the premises should be decapitalized (that is, written off as expenses of the reporting period), since the building will require different equipment, and therefore new design costs, which will be included in the initial cost of the facility. This also applies to other types of capitalized costs that will not bring economic benefits in the future.

Purchase of fixed assets with deferred payment

IAS 16 clearly states that, regardless of the payment scheme for an acquired item of property, plant and equipment, “the cost of acquisition is its cash equivalent price at the date of recognition”, that is, it is equal to the amount of cash that would have to be paid for the item at the date of acquisition (or current price in cash equivalent).

This provision means that interest on deferred payment, that is, in fact, interest on the loan that the company acquiring fixed assets receives, should not be included in their original cost. Moreover, the loan here is defined from an economic point of view, that is, it is not associated with the conclusion of a loan agreement.

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Fixed assets (IFRS IAS) 16)

Fixed Assets (Fixed Assets)— These are tangible assets that:

- are used by the company for the production or supply of goods, provision of services, for rental or for administrative purposes;

- intended to be used for more than one period.

Criteria for recognition of fixed assets:

3 Accounting for fixed assets (IFRS 16)

Meets the definition.

2. There is a high probability that the company will receive future economic
benefits from the use of this fixed asset.

3. The cost of a fixed asset can be reliably estimated.

An item of property, plant and equipment that can be recognized as an asset must be valued at cost- this is the amount of money paid at the time of its acquisition or during its construction.

Subsequent costs related to the maintenance and operation of fixed assets (labor costs, consumables) are written off as period costs as they arise.

Book value— the amount at which an asset is recognized in the financial statements after deducting accumulated depreciation and accumulated impairment losses.

Cost price- the amount of cash and cash equivalents paid or the fair value of other consideration given to acquire the asset, at the time of its acquisition or during its construction, or, if applicable, the amount at which such asset was initially recognized in accordance with the specific requirements of other IFRSs, for example IFRS 2 Share-based Payment.

Depreciable value- the actual cost of an asset or another amount that replaces the actual cost, minus its residual value.

Depreciation of fixed assets— systematic distribution of the value of an asset over its useful life.

Enterprise-specific value is the present value of cash flows that an entity expects to receive from the continued use of the asset and from its disposal at the end of its useful life or to pay when settling any liability.

fair value is 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 (see IFRS 13 Fair Value Measurement).

Impairment loss— the amount by which the carrying amount of an asset exceeds its recoverable amount.

Recoverable cost— the greater of the asset's fair value less costs to sell or its value in use.

Residual value of the asset— the estimated amount that an entity would currently receive from disposal of an asset, after deducting the estimated costs of disposal, if the asset had already reached the end of its useful life and condition at the end of its useful life (Spanish term “RESOLVAL VALUE!!!”)

Useful life- This:

(a) the period of time over which the asset is expected to be available for use by the entity; or

(b) the number of output or similar units that the entity expects to receive from the use of the asset.

IAS 16 Property, Plant and Equipment provides two models of subsequent accounting fixed assets:

ü historical cost accounting model:

Book value of fixed assets (FP) = Initial cost – Accumulated depreciation – Accumulated impairment loss.

ü revalued cost accounting model:

Book value of fixed assets (FP) = Revalued value – Accumulated depreciation – Accumulated impairment loss.

Depreciation methods:

Linear method;

Reducing balance method;

Units of production method.

Linear depreciation method for fixed assets consists of charging a constant amount of depreciation over the useful life of the asset, if the residual value of the asset does not change.

As a result of applying the reducing balance method the amount of depreciation charged over the useful life is reduced.

Units of production method consists of charging a depreciation amount based on expected use or expected productivity.

The enterprise chooses the method that most accurately reflects the expected consumption pattern of the future economic benefits embodied in the asset. The chosen method is applied consistently from one accounting period to the next, unless there is a change in the pattern of consumption of these future economic benefits.

It is not acceptable to use a depreciation method that is based on the revenue generated by the activities in which the asset is involved. Revenue generated by the activities in which the asset is engaged generally reflects factors other than the consumption of the economic benefits embodied in the asset. For example, revenue is affected by other resources and processes used, sales activities, and changes in sales volumes and prices. The price component of revenue may be affected by inflation, which has no bearing on how the asset is consumed.

Derecognition of fixed assets:

The fixed asset must be written off from the general financial statement:

ü upon its disposal (sale, donation, sale with leaseback, etc.);

ü if economic benefits from its use are no longer expected;

ü when reclassifying a fixed asset into an asset held for sale (IFRS 5 “Non-current assets held for sale and discontinued operations”).

IAS 16 Property, Plant and Equipment is the main international standard governing the accounting for property, plant and equipment.

Also, when studying the rules for accounting for fixed assets, you must be guided by IAS 1 “Presentation of Financial Statements”, IAS 17 “Leases”, IAS 23 “Borrowing Costs”, IAS 36 “Impairment of Assets”.

Definition of fixed assets

Fixed assets are tangible assets that

are used by the company for the production or supply of goods and services, for rental to other companies or for administrative purposes; And
intended to be used over more than one annual period.

Criteria and features of recognition of fixed assets

An item of property, plant and equipment should be recognized as an asset when:

it is probable that the company will receive future economic benefits associated with the asset;
The cost of the asset to the company can be reliably estimated.

When determining that a separate item of fixed assets is constituted, recognition criteria should be applied taking into account the specific circumstances and specifics of the company's financial and economic activities. For example, small devices of insignificant value, stamps, templates and other similar parts can be taken into account as a single accounting object; Spare parts and equipment for servicing fixed assets are generally included in inventories and written off as expenses as they are used. However, large spare parts, backup equipment, as well as spare parts and equipment for servicing a specific facility can be accounted for as fixed assets if the company expects to use them for more than one (annual) period, but not more than the useful life of the corresponding fixed asset item.

Under certain conditions, it is advisable to divide the total cost of the asset by components and account for each part as a separate item of fixed assets. This occurs when the component parts of the asset have different useful lives or the benefit from the use of individual parts occurs in different ways, requiring the use of different depreciation rates and methods. For example, an airplane and its engines should be accounted for separately because they have different useful lives.

Assets related to environmental safety and environmental protection are accounted for as property, plant and equipment if they enable the company to increase the future economic benefits of other assets owned by the company. In this case, the carrying amount of the entire group of relevant assets should not exceed their total recoverable amount.

The concept of “group of fixed assets”

Group (type) of fixed assets is a combination of assets that are identical in content and nature of their use in the course of the company’s activities.

Examples of groups of fixed assets may be the following: land; land and buildings; equipment; ships; aircraft; motor vehicles; furniture and household supplies; equipment of administrative premises.

Initial valuation of an item of fixed assets

Initial recognition of fixed assets is carried out at actual cost.

Initial cost is the amount of cash or cash equivalents paid, or the fair value of other consideration given for it, at the time the asset was acquired or constructed. The structure of the initial cost of fixed assets is determined by the method of acquiring the object.

Initial cost of objects, purchased for a fee, includes the following elements:

purchase price, including duties and non-refundable purchase taxes (less any trade discounts provided);
direct costs of delivering the asset to its destination and bringing it into working condition (costs of site preparation, costs of delivery and unloading, installation, cost of professional services of architects, engineers, etc.);
the estimated cost of dismantling and removing the asset (dismantling costs) and restoring the site on which it was located (covered by IAS 37 Provisions, Contingent Liabilities and Contingent Assets).

Example

The company operates offshore oil fields; licensing agreements provide for the dismantling of the oil drilling rig upon completion of oil production and restoration of the seabed.

At the end of December 2000, a drilling rig was put into operation at one of the fields. Direct costs for the acquisition of the drilling rig amounted to CU 1,000, transportation and installation costs were CU 100, and the useful life was set at 20 years.

The estimated cost of decommissioning the facility and restoring the seabed after the facility ceases operations is CU120.

The discount rate for calculating the amount of the reserve as of the date of recognition is determined at 7%.

*—calculations use rounding to decimal places.

The commissioning of a fixed asset will be reflected in the following accounting entry:

Dt sch. “Fixed assets” CU 1,131

K-t sch. “Settlements with suppliers and contractors” CU 1,100

K-t sch. “Decommissioning reserve” CU 31

Please note that the initial amount of recognition of the reserve (the discounted value of the future outflow of resources as of December 31, 2000, CU 31) differs from the nominal amount for which the obligation is expected to be repaid upon decommissioning of the facility (as of 12/31/2020, CU 120 ) at CU 89 (RUB 120 – CU 31). This difference represents the amount of change in the reserve due to the reduction in the discount period. The rules for reflecting changes in reserve estimates are established by IFRIC 1.

Initial cost of fixed assets self-made determined by the amount of expenses incurred by the company.

Administrative, general and other similar indirect expenses Actual costs of acquisition, creation and production are not included, except when they are directly related to the acquisition, creation or production of fixed assets.

When using the alternative approach provided for by IAS 23 Borrowing Costs, the cost of property, plant and equipment is included in borrowing costs.

If the object is purchased due to received government subsidies, then the carrying amount of the item can be reduced by the amount of subsidies in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

Example.

Manufacturing company AAA received a government subsidy of CU20 million. According to the terms of the subsidy, the company must use funds to purchase a production line for the production of baby food and begin production within a year. The company purchased production equipment worth CU 100 million and began producing baby food. The useful life of the equipment is 10 years.

This government subsidy is an asset-based subsidy.

Let us consider the reflection of government subsidies in two ways.

a) as deferred income.

Note that the resulting impact on the financial statements will be the same under each accounting treatment: net assets on the balance sheet increased by CU72 million; Profit for the reporting period decreased by CU 8 million.
Extract from the financial statements of AAA company
Balance Gains and losses report
Index Amount, million units Index Amount, thousand rubles
a) as deferred income
(RUB 100 million – CU 10 million)
90 Depreciation expenses (10)
Deferred income as part of liabilities (20 – 2) (18) Other income/government subsidies 2
b) as a decrease in the value of the asset by the amount of the subsidy
Fixed asset within assets
(RUB 80 million – CU 8 million)
72 Depreciation expenses (8)

An item of fixed assets can be acquired in exchange or by partial exchange to an item of fixed assets of another type or another asset. The cost of the item received is determined at the fair value of the asset received, which is equivalent to the fair value of the asset given up, adjusted for the amount of cash or cash equivalents paid or received.

The stated rule is valid in a situation where the exchange is commercial. At the same time, the organization determines the presence of commercial content in the exchange transaction by the degree of expected change in its future cash flows as a result of the transaction. If the exchange is not qualified as commercial, then the initial cost of the acquired item is estimated at the book value of the transferred asset.

fair value is the amount for which an asset can be exchanged in a transaction between knowledgeable, willing parties who are independent of each other.

Example.

Company A exchanges a car (original cost CU100, accumulated depreciation CU30, market value of the car CU60) for a truck (market value CU100), as a result of the exchange an additional payment is made by company A in the amount of CU 40 Reflect the transaction in accordance with IFRS in the financial statements of company A.

Answer:

IFRS 16 requires that in the case of a commercial exchange, the item be recognized at the fair value of what was received, which in turn is equal to the fair value of the asset transferred, adjusted for the cash transferred (received).

BSnewOS = SSreceived = SStransmitted + (-) DS

BC of the truck = CU 100 or 60 cu. + 40 c.u.

The fair value of the vehicle transferred is CU60. (RUB 100 – CU 40)

On the exchange transaction, Company A received a loss of CU10, since the book value of the car (CU70) exceeds its market value (CU60).

The consolidated accounting record for balance sheet items (f1) and profit and loss statement (f2) can be presented as follows:

D-t F1 OS/truck 100 cu. Kit F1 OS/car 70 cu.

Dt F2 Loss from the sale of fixed assets CU 10 Kt F1 Cash CU 40

Answer: as a result of this operation, a new item of fixed assets will be reflected on the balance sheet of company A at an initial cost of CU 100, and the profit and loss statement will show a loss on the sale of fixed assets of CU 10.

Note: VAT reporting issues are not considered.

In cases of acquisition of fixed assets on deferred payment terms for a period exceeding normal lending terms, its initial cost is assumed to be equal to the price without taking into account deferred payment. The difference between its amount and the total payments under the contract is recognized as interest expense over the period of the loan, unless it is capitalized in accordance with the alternative approach provided by IAS 23 Borrowing Costs.

Example.

On January 1, 2005, the AAA manufacturing company purchased equipment for packaging its products worth 5,000 thousand rubles, plus 18 percent VAT. The payment scheme in accordance with the agreement is as follows (excluding VAT): the first payment in the amount of 2,360 thousand rubles. produced on January 10, 2005, for the remaining 3,540 thousand rubles. payment deferment is provided for a year. Delivery costs amounted to 100 thousand rubles. without VAT. AAA's cost of capital is 10 percent.

Subsequent costs associated with fixed assets

Subsequent costs related to an item of fixed assets should be divided into

expenses of the reporting period and
costs that increase the book value of an asset.

Costs that increase the carrying amount arise when it is probable that the organization will receive future economic benefits in excess of the standard indicators originally calculated for existing fixed assets.

All other subsequent costs should be recognized as expenses in the period in which they are incurred. As a rule, these include costs for repairs and maintenance of fixed assets, which do not improve the standard performance indicators of fixed assets.

If individual parts of an item of fixed assets are replaced, having different useful lives and accounted for as separate objects, then the corresponding costs are reflected in accounting as the acquisition of a new item of fixed assets, and the replacement is considered as a disposal of the old component.

Accounting for property, plant and equipment after initial recognition

A company under IAS 16 can choose one of two models for accounting for subsequent valuation:

historical cost accounting model;
revalued cost accounting model.

It is important to note that IAS 16 allows the property, plant and equipment accounting model to be applied to individual groups of property, plant and equipment.

Historical cost accounting model is as follows: after initial recognition, an item of property, plant and equipment is carried at its cost less accumulated depreciation and accumulated impairment losses recognized in accordance with IAS 36 Impairment of Assets.

Under the life from depreciation refers to the amount by which the carrying amount of an asset exceeds its recoverable amount; recoverable amount- the greater of two values: the net realizable price and the value in use of the asset.

Revaluation accounting model assumes that, after initial recognition, an item of property, plant and equipment is carried at a revalued amount, which is its fair value at the date of revaluation less depreciation and revaluation losses. Thus, the alternative approach involves systematic revaluation of fixed assets to fair value.

Requirements for conducting and reflecting revaluations of fixed assets

It is not individual fixed assets that are subject to revaluation, but the entire group to which the object belongs. Revaluations should be carried out on a regular basis so that the carrying amount of an item does not differ materially from its fair value at the reporting date.

The fair value of fixed assets is usually their market value. This assessment is usually carried out by professional appraisers.

IAS 16 highlights two ways to reflect revaluation on accounting accounts:

the amount of accumulated depreciation at the date of revaluation is revalued in the same proportion as the change in the carrying amount of the asset before depreciation; in this case, after revaluation, the book (residual) value of the asset is equal to its revalued value;
the amount of accumulated depreciation at the date of revaluation is written off to reduce the carrying amount of the asset before depreciation, after which the result is revalued to fair value.

Example.

On January 1, 2005, NNN acquired a fixed asset with an initial cost of CU100 and a useful life of 5 years. The market value of the fixed asset as of December 31, 2005 is CU 90. (based on the results of a professional appraiser's report), the useful life has not been revised.

1) proportional method:

By the time of revaluation (December 31, 2005), depreciation of CU 20 will be accrued on the fixed asset. (RUB 100 / 5 years = CU 20). The residual value of the property before revaluation will be CU80. (RUB 100 – CU 20 = CU 80).

The revaluation factor is 1.125 (90 CU / 80 CU = 1.125).

Thus, it is necessary to increase the initial cost of the fixed asset (CU 100 x CU 1,125 – CU 100) and accumulated depreciation (CU 20 x CU 1,125 – CU 20), applying to them the revaluation factor, the difference in case of revaluation, it is credited to the revaluation reserve

Depreciation for 2006 is determined based on the “new” initial cost and the old useful life: 112.5 / 5 years = CU 22.5.

2) method of writing off accumulated depreciation against book value:

Dt sch. The main thing 10 cu.
K-t sch. Revaluation reserve 10 cu.
Depreciation for 2006 is determined based on the revalued cost (90 CU) and remaining useful life (4 year = 5 - 1): 90 CU. / 4th year = 22.5 units

Rules for reflecting revaluation results fixed assets:

revaluation is carried out for each fixed asset item;
the revaluation is attributed to the increase in the company’s capital (reflected in the balance sheet under the item “Result of revaluation”), while the amount of the revaluation within the limits of the previously carried out markdown is included in the profit and loss statement, i.e. increases the net profit of the reporting period;
the markdown is recognized as an expense of the period, reduces the financial result and is reflected in the income statement, while the amount of the markdown within the limits of the previously made revaluation is included in the reduction of capital (subtracted from the item “Result of revaluation”).

Example

An item of property, plant and equipment was purchased on 1 January 2000 for CU100. The Company uses the revalued cost model of accounting. According to the report of an independent appraiser, the market value of the property is: as of December 31, 2000. 130

d.e., as of December 31, 2001. CU 110, as of December 31, 2002 CU 94, as of December 31, 2003. CU 112

For simplicity, depreciation is not considered in this example, however, depreciation charges must be accrued annually before revaluation is carried out.
Solution:
date Assets Reserve
revaluation
Profit report
and losses
A comment
01.01.00 100 — The revaluation is credited to the revaluation reserve account (Russian equivalent of account 83)
D-Fixed assets 30

Set Reserve revaluation 30

31.12.00 130 30
01.01.01 130 30 The depreciation of fixed assets, within the previously reflected revaluation, is covered by the previously created revaluation reserve.
D-t Revaluation reserve 20

Fixed assets 20

(20) 20)
31.12.01 110 10
01.01.02 110 10 The markdown is covered by the revaluation reserve, but only in the amount of the previously recognized revaluation (No. 1)
D-t Revaluation reserve 10

Fixed assets 10

The remainder of the discount (16 – 10) is written off as expenses for the period

D-t F2 / impairment loss 6

K-Fixed assets 6

(16) (10) №1 (6) №2
31.12.02 94 —
01.01.03 94 — The additional valuation, within the limits of the previously reflected markdown, is reflected in the income statement as “compensation” for the previously shown markdown (No. 1):
D-Fixed assets 6

K F2 / compensation for impairment loss 6

The difference (18 – 6) is written off to the revaluation reserve account, like a regular revaluation (No. 2):

D-Fixed assets 12

Set Revaluation reserve 12

18 12 №2 6 №1
31.12.03 112 12

Realization of the revaluation amount. The positive result of revaluation (revaluation), included in the “Capital” section of the balance sheet, is implemented in one of two ways:

written off in full directly to the retained earnings account upon disposal of the asset;
written off in installments as the asset is used by the company as the difference between the amount of depreciation calculated on the basis of the revalued cost of the asset and the amount of depreciation calculated on the basis of its original cost.

Regardless of the chosen method, writing off the revaluation of fixed assets is not reflected in the income statement.

Example

The initial cost of the fixed asset is CU 1,000, the useful life is 5 years. At the end of the first year of operation (as of December 31, 2004), a revaluation was carried out (the amount of CU 900 is listed in the professional appraiser’s report), as of December 31, 2005. the market value reached CU800.
Reflect information in financial statements in accordance with IFRS 16.
Assets Profit and Loss Statement Revaluation reserve Retained earnings Prim
Book value 1 000
Depreciation for the year to 31 December 2004 (200) (200)
Book value based on historical cost 800
Revaluation 100 100
31 Dec 2004 900 100 2

Book value 900 100
Depreciation for the year to 31 December 2005 (225) (225) 3
Book value up to
revaluation
675
Revaluation 125 125
Realization of the revaluation amount (25) 25 4
December 31, 2005 800 200

Solution Notes:

Depreciation is calculated for the period up to the date of revaluation. It is based on the carrying amount during the period.
The increase in the carrying amount is attributed directly to the amount of the revaluation. This fact will be reflected in the statement of changes in equity in accordance with IFRS 1 Presentation of Financial Statements.
Depreciation is based on the carrying amount of CU900, which is to be written off over the remaining life of the asset (4 years). 900 / 4 years = CU 225
As the asset depreciates, the amount of its revaluation is realized. This realization is shown as a transfer from the revaluation amount to retained earnings.

It is determined: as the difference between depreciation based on the original cost (200 CU) and amortization of the revaluation amount (225 CU) = 25 CU or as part of the revaluation amount related to the report. period 100 / 4 years = CU 25

Depreciation of fixed assets

IAS 16 Property, Plant and Equipment defines depreciation– as a systematic reduction in the depreciable cost of an asset over its useful life.

Amortized cost- actual costs for the acquisition of a fixed asset or other value reflected in the financial statements instead of actual costs, minus the liquidation value, i.e. original cost less salvage value.

Liquidation value is the amount a company expects to receive for an asset at the end of its useful life less the expected costs of disposal. If the liquidation value is insignificant (insignificant), it may not be taken into account when forming the depreciable value. If a company uses the revalued cost model, then the liquidation value is also subject to revaluation.

Example.

The organization purchased a passenger car and accepted it for accounting at the actual acquisition costs - CU 20,000. The useful life of the car is set at 3 years (the company's policy is that cars with a period of more than three years are exchanged for new ones with an additional payment). The company estimates at the recognition date that the asset could be sold for CU11,200 after three years. The cost of completing the transaction will be CU 200.

The liquidation value is CU 11,000. (11200 - 200), and the depreciable cost is CU9000. (20000 - 11000). The annual amount of depreciation expenses using the straight-line method will be CU 3,000. (9000 / 3).

According to IAS 16 useful life of a fixed asset item is the period over which a depreciable asset is expected to be used, or the number of units the company expects to produce using the asset. When determining the useful life of an asset, the following factors must be considered:

the expected level of use of the asset based on its expected capacity or actual performance;
expected physical wear and tear, depending on the intensity of use (number of shifts), repair and maintenance program, storage conditions;
technological and obsolescence;
legal or similar restrictions on the use of an asset.

Thus, according to IAS 16, the useful life of fixed assets is determined by the company independently by assessment based on experience with similar assets and other objective factors.

The useful life should also be periodically reviewed: upward if costs are incurred that improve the condition of the fixed asset beyond the initially established standards or the company's repair and maintenance policy becomes more effective; towards reduction, in case of unfavorable changes in technology or market situation.

IAS 16 does not establish a closed list depreciation methods fixed assets. The main requirement is that the depreciation method used reflects the pattern in which the company consumes the economic benefits derived from the asset. Among the depreciation methods listed in the standard are: straight-line method; declining balance method of depreciable cost; functional method.

Depreciation expense is recognized as an expense for each period unless it is included in the carrying amount of another asset.

Depreciation is not charged on land plots, so land and buildings should be classified as separate accounting items of fixed assets.

The depreciation method applied to property, plant and equipment under IFRS should be reviewed periodically. Thus, in the event of significant changes in the pattern of obtaining economic benefits from an object, the method of calculating depreciation must be changed in such a way as to correspond to these changes.

Revisions to depreciation methods and useful lives (as per IFRS 8 Accounting Policies, Changes in Accounting Estimates and Errors) are treated as changes to accounting estimates and require an adjustment to the amount of depreciation charges for the current and future reporting periods.

Disposal of fixed assets

Disposal of an item of fixed assets is carried out in the form of sale of the asset, transfer to a finance lease or termination of use, due to the fact that the organization no longer expects to receive benefits associated with it.

The financial result (profit or loss) from the disposal of a fixed asset is determined as the difference between the amount of proceeds from disposal and the book value of the asset and is reflected as income or expense in the income statement.

Idle assets that are decommissioned and held for sale are accounted for in accordance with IFRS 5 Disposals of Non-Current Assets Held for Sale and Discontinued Operations.

Reflection of fixed assets in reporting

IN balance sheet fixed assets are reflected in non-current assets as a separate item at book value, which is equal to:

original less accumulated depreciation and accumulated impairment losses (cost model);
revalued amount less accumulated depreciation and accumulated impairment loss (revalued amount accounting model).

Disclosure requirements under IAS 16

The following information is required to be disclosed in the financial statements for each type (group) of fixed assets:

methods for estimating book value before depreciation;
depreciation methods used;
applicable useful lives or depreciation rates;
the carrying amount before depreciation and accumulated depreciation (together with accumulated impairment losses) at the beginning and end of the period;
a reconciliation of the carrying amount at the beginning and end of the period, reflecting:
movement of fixed assets (receipt, disposal, acquisition by merger);
increases or decreases in value resulting from revaluations and impairment losses recognized or offset in equity;
impairment losses recognized or offset in the income statement;
depreciation;
net exchange differences and other changes.

Financial statements must also disclose: accounting policies regarding the estimated costs of restoration of natural resources associated with the operation of fixed assets; the amount of costs for objects under construction; the amount of obligations to purchase fixed assets; fixed assets pledged as collateral, as well as objects with restricted ownership rights.

In relation to fixed assets accounted for according to the revalued cost accounting model, The following information is additionally disclosed:

method and date of asset revaluation;
the fact of engaging an independent appraiser;
methods used in determining replacement cost (replacement costs);
the carrying amount for each group of property, plant and equipment that would be reported in the financial statements if the assets were recorded at cost less depreciation;
the result of the revaluation, indicating changes during the period and restrictions on the distribution of the balance of the revaluation reserve among shareholders.

Users of financial statements can be provided with information on the book value of fixed assets: temporarily not used; fully depreciated, but used; which have been discontinued and are intended for disposal.

Analogue of IFRS (IAS) 16 in Russian accounting practice

The analogue of IAS 16 in Russian accounting is PBU 6/01 “Accounting for fixed assets”.

The provisions of PBU 6/01 largely coincide with similar provisions of IAS 16, and in some cases contain more detailed instructions. At the same time, it is still too early to talk about the full compliance of these documents.

Characteristic	Similarities	Difference
Definition of fixed assets	matches	—
Criteria for recognition of fixed assets	—	In PBU 6, unlike IAS 16, there are no criteria for recognizing fixed assets
Initial valuation of fixed assets	Same except for differences	According to IAS 16, the initial cost includes the amount of the provision for dismantling at the end of its useful life, calculated according to IAS 37; Borrowing costs are included in cost only if the alternative approach under IAS 23 is applied; When purchasing fixed assets on deferred payment terms, the initial cost is determined as the discounted amount of the future payment
Subsequent valuation of fixed assets	Possibility of accounting at original or revalued cost	PBU 6/01 does not allow revaluation of land plots; There are different approaches to reflecting the results of revaluation and the implementation of revaluation amounts
Reflection of impairment of fixed assets	—	IAS 16 requires that the carrying amount of property, plant and equipment does not exceed its recoverable amount (IAS 36 impairment testing)
Useful life	The definition rules correspond	—
Depreciation	Compliance of depreciation methods	In IAS 16, depreciation is subject to amortizable cost; The presence in PBU 6/01 of the cost criterion of 10 thousand rubles. for a one-time write-off for expenses; Absence in PBU 6/01 of a requirement for periodic review of the depreciation method The presence in PBU 6/01 of clear instructions on the beginning, termination and suspension of depreciation
Disclosure of information in reporting	Individual indicators coincide	PBU 6/01 does not require disclosure of certain indicators, including information on impairment losses; methods and dates of revaluations; the fact of attracting professional appraisers, etc.

Comparative characteristics of accounting for fixed assets according to IAS 16 and PBU 6

Tests

The useful life of an asset refers to:
a) to the entire period during which the asset is available for use by any number of owners.

b) to the period during which the asset is available for use by the company.

c) average between 1 and 2.
Current repair and maintenance costs are usually:
a) capitalized;

b) are recognized as expenses in the income statement as they are incurred;

c) are accounted for as deferred expenses.
The cost elements are:
a) purchase price;

b) costs directly related to the delivery of the asset to the place of its intended use;

c) an initial estimate of the cost of dismantling and removing the asset;

D) purchasing department overhead costs associated with purchasing the asset.
When property, plant and equipment are purchased on deferred payment terms for a period longer than normal credit terms, any additional payment over the price of the asset is accounted for as:
a) element of the initial cost of fixed assets;

b) financial expenses of the current period (interest expenses);

c) repair and maintenance costs.
When one or more items of property, plant and equipment are exchanged for a new asset, the new item of property, plant and equipment is valued at:
a) replacement cost of property;

b) the fair value of the received object;

c) the book value of the transferred object.
A company can choose either the cost or revalued cost method as its accounting policy. The accounting method chosen should apply to:
a) all fixed assets;

c) a whole class of fixed assets;

d) most fixed assets.
When accounting at cost, an asset is accounted for by:
a) actual cost;

b) actual cost minus accumulated depreciation;

c) actual cost less accumulated depreciation and impairment losses.
When a fixed asset item is revalued, the accumulated depreciation as of the date of revaluation is:
a) revalued proportionally, with a change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation is equal to its revalued amount;

b) written off against the gross carrying amount of the asset, while the net amount is revalued to the revalued amount of the asset;

c) either (a) or (b).
IFRS 16 provides the following guidance regarding useful lives:
a) by analogy with PBU 6/01, IFRS 16 contains instructions on what factors should be taken into account when determining the useful life, and the specific useful life of fixed assets is established directly by the organization;

b) by analogy with the Tax Code (Chapter 25), IFRS 16 contains interval values of useful lives for groups of fixed assets, which each organization must necessarily follow.

c) the useful life is determined based on the tax requirements of the country where the organization is located.
The asset's carrying amount is 100. Its fair value is 200. Is depreciation continuing?
b) yes, until the end of the useful life of the asset;

c) yes, but the depreciation rate should be two times less.

Answers to tests: 1-b, 2-b, 3-a,b,c, 4-b, 5-b,c,6-c, 7-c, 8-c, 9-a, 10-b

Any business is a complex system aimed at extracting benefits for its owners and employees in the form of profits, salaries and other preferences. Good business performance is impossible in isolation from the material base of the company. In many ways, the presence of a balanced composition of long-term assets and their rational use determines how effective this company will be as a whole.

To control the use of such long-term assets of an enterprise, which bring the company tangible preferences in the economic format and are used in business for a long time, in enterprise accounting there is such a section as accounting for the company's fixed assets.

Fixed assets for companies of different profiles or operating in different business sectors will be recognized as different assets. Having a truly large segmentation, fixed assets are divided according to characteristics and go through a certain life cycle within the company: they are acquired, put into operation, they wear out, they are serviced, repaired, and over time they are removed from the company. All these stages are recorded in the accounting of the enterprise with one goal: increasing the efficiency of their use and monitoring their safety.

A good team made up of operational and financial managers is able to analyze the impact of groupings of fixed assets on the business and, based on this, develop recommendations that will increase the profitability of the enterprise as a whole by improving production processes, reducing costs, and increasing labor productivity.

Fixed assets play a huge role for business, not only from the point of view of assessing the sustainability of the company as an independent economic entity, but also in assessing its attractiveness as an investment object. With the growth of intercontinental business interaction and the constant migration of capital from private and public structures to the business assets of other economies, the relevance of the emergence of an international approach to assessing assets has also grown. Financiers around the world needed a clear approach to working with assets and rules of the game in determining the various cost characteristics of assets. In general, the international financial reporting bulletin IAS 16 OS of an enterprise has become a set of rules and recommendations that determine the approach of financial managers to the overall assessment of fixed assets of a business.

We will talk about the role of this standard in the work of the company, its significance in matters of the applicability of financial statements and the productivity of accounting for fixed assets according to the IFRS standard in today’s article.

IFRS IAS 16 General information

The international financial reporting standard IAS 16 was developed to reliably and consistently produce internal corporate accounting of property, plant and equipment and reflect this data in financial statements.

In turn, sections of financial statements that are devoted to fixed assets enable interested parties from among shareholders and users of IFRS to find comprehensive information about the state of the enterprise in terms of long-term assets, the size of investments in fixed assets, changes in the composition of such investments, as well as issues of their carrying value, depreciation and impairment losses.

Figure 1. An example of a statement of financial position in the software product “WA: Financier” (fragment): fixed assets.

For any owner or investor, information of this nature is extremely important, since without it not only forecasts of the financial prospects of the business are impossible, but also the operational improvement of the company’s efficiency, which today comes to the fore in matters of the company’s competitiveness in the market.

The standard is required to be applied by all companies that maintain accounting in accordance with the requirements of international financial practice for all types and types of fixed assets, except those that would contradict another standard. As an example, we can recall assets that a company initially acquires not for use in its business, but in order to make money on the resale of such assets: a segment of such assets will not be recognized and accounted for under IFRS 16, like some others: for example, those related to agriculture and minerals.

IFRS 16 in basic definitions

By analogy with other international financial reporting standards, the IFRS16 standard provides the financial team of an enterprise with a fairly strict list of definitions and norms of a recommendatory nature, according to which it is necessary to carry out work within the framework of the standard. All this is spelled out and agreed upon at the level of the economic community in order to achieve maximum identity of the results of applying the standard, reliability of information and ease of working with the standard for a wide range of people.

According to the IAS 16 standard, fixed assets of an enterprise include two groups of segmented tangible assets, which have two most important properties in the format of the enterprise’s business:

The company owns these tangible assets in order to continuously use them in its economic activities.
These assets were acquired to be used for more than one IFRS reporting period equal to a calendar year.

Each such asset, according to IFRS 16, has a clear or predictable useful life:

In the first case, the standard interprets the concept of time that is planned for the useful use of a given fixed asset. This may not only be due to the failure of an asset, but simply the business model of a particular company - to invest in updating fixed assets at a certain time interval.
In the second case, the standard interprets the projected productive life as the business's expectations for the number of units produced, work cycles, or economic effect from the use of a certain tangible asset.

Each asset has a certain set of cost characteristics:

Cost– the recognized fixed value of cash or other payment equivalents that were paid to obtain the asset for ownership and use.
Amortized cost– the recognized fixed actual cost of the asset, which is the difference between the purchase price minus the residual value.
Book value– the remaining value of the asset, which is recognized in the statements after reducing the amounts of depreciation and impairment losses of the asset.
Residual value- the estimated amount that the company can count on in the event of disposal of an asset, minus the costs of disposal.
Recoverable amount– the actual cost reduced by the costs of selling such an asset or the cost of using the asset.
Present value– the estimated value of cash flows that the enterprise, according to the forecast, plans to receive from the use and disposal of the asset from fixed assets.
Fair value– an estimate of the price for which an enterprise could sell an asset on the open market without incurring significant costs for such a transaction.
Amount of impairment loss– as the amount by which the balance sheet value exceeds the recoverable amount.

In this case, the cost of a fixed asset is recognized only if the company can reasonably prove:

That this asset will bring economic benefits to the company, and over its useful life the amount of return will exceed the cost of acquisition and subsequent ownership.
That the cost of the asset itself can be sufficiently reliably confirmed in the company’s accounting and fairly valued.

When maintaining automated accounting, the cost data presented above can be displayed in the “Fixed Assets” directory:

Figure 2. Fragment of the reference book “Fixed Assets” in the “WA: Financier” program.

It is important to note that IFRS 16 does not define or classify tangible assets that should and should not be recognized as property, plant and equipment. Also, the standard does not regulate the combination or separation of fixed assets as a whole, but allows the management team to use their professionalism and focus, first of all, on the company’s business goals when classifying and recognizing fixed assets. For example, in some cases, auxiliary technical equipment, reserve or auxiliary equipment, may be recognized as property, plant and equipment, although a company may also classify them as inventory, along with spare parts, for example.

Recognition of an asset as a property, plant and equipment according to IFRS 16

Initially, in order for a company to recognize an acquired asset as a property, plant and equipment, it must value the asset at its cost, which includes the following items:

The amount actually paid for the purchase of the asset, including all transaction costs, import duties, and any non-refundable taxes, subject to the exclusion of any discounts or rebates achieved. That is, the purchase price is taken “as is”, in the natural amount of the expenditure made.
Costs incurred by a company to arrange the delivery, commissioning, configuration, or retrofitting of a purchased asset.
The amount of projected costs for dismantling a fixed asset and excluding it from the production complex of the enterprise.

In some cases, during the installation of a fixed asset, unrelated additional income/loss may be received, which will be reflected in accounting outside of the asset in question.

For example, the company planned to build an open-air entertainment center and, in addition to the equipment, created a site for placing the equipment at the specified location. While the Contractors were manufacturing/assembling/delivering equipment to the site of actual operation, this site was used for another purpose - as a site for storing containers of heavy-duty vehicles.

Once the asset has been valued at its cost and has been recognized as such according to the recognition criteria as a fixed asset, the company must choose a fixed asset accounting model for itself:

The first option is the actual cost model, which involves accounting for an asset as an item of property, plant and equipment at its cost minus proportional accumulated depreciation and losses.
The second option is the revalued cost model, which takes the fair value of the asset, accumulated depreciation, and accumulated impairment losses. With this method of accounting, regular systematic revaluation of the fixed asset is necessary in order to constantly maintain (for each period) the fair value of the asset.

The fixed asset accounting model in accordance with IAS 16 is not imposed on the enterprise. The enterprise independently chooses an accounting model in accordance with the IFRS 16 standard and undertakes to apply such a policy for the entire selected segment of such fixed assets.

Depreciation of fixed assets according to IFRS 16

The company, guided by its accounting policies, business objectives and IFRS principles, must depreciate fixed assets over the entire period of their useful economic use.

Figure 3. The document “Depreciation of fixed assets” in the software product “WA: Financier” automatically calculates depreciation in the required period.

A fixed asset in accounting can be considered either as a single whole or as a combination of interrelated components. In the case where the cost of a component of a fixed asset constitutes a significant part of the total cost, such components undergo the depreciation procedure separately. But according to the standard, if there is a justified accounting need, an enterprise can charge depreciation separately and for components of a fixed asset that do not constitute a significant amount in its cost.

The amount that, based on the results of the work of financiers, was derived as the amount of depreciation charges should be recognized in the reporting period as part of profit or loss, unless this amount is included in the carrying amount of another asset. This occurs when the economic potential of one asset becomes the economic efficiency of another asset.

The amount of depreciation of an asset must be repaid evenly throughout the entire economic life of the specified asset. The asset must be analyzed for its residual value and economic life at least once every year. If there are discrepancies between the forecast values and the actual ones, such changes must be made by adjustment in the form of a change in the accounting estimate.

Depreciation of an asset is carried out according to IAS 16 even when the fair value is higher than the book value, just as depreciation of a fixed asset does not stop if it is not actually used by the company due to failure, during maintenance or scheduled repairs.

Depreciation methods for fixed assets IFRS 16

The depreciation model a company chooses must be measured, rational, and clearly reflect how the company extracts productivity and economic benefits from the asset. However, any depreciation method should be analyzed at the end of each reporting period so that the company's management team can reasonably assess the feasibility of using this method.

The enterprise independently selects, within the framework of IFRS IAS 16 Fixed Assets, a depreciation method that will most fully correspond to the projected pattern of consumption of economic goods produced by this asset. If the benefit structure does not change over time, the depreciation method used in the valuation does not change. Depreciation methods under IFRS 16 include:

Linear - a method in which the residual value of the fixed assets remains unchanged, and depreciation is charged in equal parts throughout the entire economic life of the asset in the business structure.
With a declining balance, everything simply decreases over time, and the amount of accrued depreciation follows the logic that new things wear out faster to a certain state, but then undergo virtually no aggregate changes.
The units of production method links depreciation and productivity. The depreciation accrued under this approach depends on the expected result or performance.

Under IFRS 16, it is not possible to apply the depreciation method related to revenue from the use of an asset, since revenue is a quantity that cannot be based on the asset alone. Revenue is influenced by the entire production chain, the totality of processes, team professionalism, luck, know-how and other intangible factors, so taking revenue as the basis for calculating the amount of depreciation is not allowed.

In the WA: Financier software product, preliminary adjustment of depreciation of fixed assets is carried out in a special reference book:

Figure 4. Setting up parameters for depreciation of fixed assets in the “WA: Financier” program.

Unfair actions of financiers in working with fixed assets

Company property is often the object of various abuses by managers or a tool through which creditors, investors or company owners can be misled:

The most common phenomenon at the small level is private theft, which leads to distortion of data on the company’s balance sheets, when in fact there is no property, but on paper it creates an asset.
The second most common violation is in the area of asset disposal, when unscrupulous financiers appropriate property for themselves, excluding it from the company’s fixed assets before the appointed time. For example, small equipment such as computers or office equipment, equipment that can be used in everyday life, and other material assets are fictitiously written off according to documents as “end-of-life” assets, but in fact they are simply taken for themselves or sold on the open market with serious dumping.
The third method, which mainly affects creditors and shareholders, is the determination of an incorrect actual value of an asset, which “embellishes” the company’s property position contrary to reality.
In fourth place are abuses, which are expressed in the company’s failure to receive the actual amount of compensation when selling an asset leaving the company at a reduced price in exchange for personal kickbacks for the company’s managers.

A well-built internal control system and accounting system, built on standardized principles, can eliminate any of the types of abuse described above when working with assets.

Decrease in the carrying amount of an asset

Over time and in connection with the use of the asset in business and economic activities, the company inevitably undergoes a process of depreciation of the fixed asset. According to the recommendations of IAS 16 Property, Plant and Equipment, a company must regularly monitor and assess the impairment of an asset in accordance with the standard that governs the methods for assessing this process.

A special standard governing the treatment of book value regulates and explains to the financial department of a company how to assess and analyze the current and changing book value, determine the recoverable amount of an asset, as well as how losses from the loss of the book value of a fixed asset can be recognized and restored in accounting.

Figure 5. The “Asset Impairment” document in the “WA: Financier” program can be used in the procedure for depreciation of fixed assets.

If there is a confirmed loss of book value, the company has a claim for compensation for such losses, or the resulting costs associated with the purchase or construction of replacement assets are interrelated, but different and separate financial actions, and therefore are taken into account independently of each other:

The company uses IFRS 36 to measure and recognize losses in the carrying amount of an asset;
If an asset is disposed of due to the expiration of its productive life or another reason for which the disposal of fixed assets is justified, then actions for such write-off are carried out in accordance with IFRS IAS 16 Fixed Assets;
The cost of those fixed assets that were equipped or arose as a reserve or replacement of retired objects will be fully regulated by this standard.

Exclusion of an item of property, plant and equipment as derecognition: Disposal of property, plant and equipment under IFRS

According to IFRS 16, an asset is recognized as long as the company can obtain economic benefits determined by its accounting policies from its use. Reaping economic benefits is not always a straightforward process. Sometimes a company acquires certain assets and invests money in such fixed assets, which, either in the aggregate or through other assets, have a beneficial effect on the economy of the company and its business. According to this statement, an object ceases to be a fixed asset in two cases:

Upon his complete departure from the company;
If his productivity is 0% or there are no longer any economic benefits from his work and there will be no economic benefits in the future.

Disclosure of information according to IFRS IAS 16 Fixed Assets

The IFRS IAS 16 Fixed Assets standard establishes requirements for the disclosure of information in the field of fixed assets by asset class of an enterprise. According to the methodological recommendations, the company is obliged to disclose reliable information that will help users of financial statements to consider the issue of fixed assets of the enterprise as fully as possible, containing:

Justification of the basis that the company uses when assessing the carrying value of assets;
Disclosure of information about the chosen depreciation method;
Terms of effective use fixed and justified in the accounting policy;
Approved norms and amounts of actual depreciation;
Classified carrying amounts and amounts of accumulated depreciation, including losses from loss of carrying value at the beginning and end of the period.

In addition, financial statements must provide users with reliable information:

On the presence of restrictions on the ownership rights of the company’s assets;
If fixed assets were transferred as a guarantee to secure obligations;
About the amount of costs and their classification, which are included in the book value of the asset at the construction/installation stage;
The amounts of the company's liabilities that were assumed to acquire fixed assets;
Amounts of compensation that were transferred to third parties in connection with the loss or depreciation of assets.

According to IFRS IAS 16 Property, Plant and Equipment, it is also useful for a wide range of users of a company’s financial statements to disclose additional information that allows them to assess the financial potential of the company:

Book values and fair values of assets not in temporary use;
Book values of assets that are fully depreciated;
The book values of assets that are no longer effectively used, but will not be sold by the company on the market.

Figure 6. Example of consolidated statements. Statement of comprehensive income (fragment) in the software product “WA: Financier”: depreciation of fixed assets is included in the cost of sales.

Conclusions and Conclusion

As you know, the valuation of fixed assets is one of the most important parts of a company’s management accounting, which reflects the actual financial base of the enterprise. Based on asset data, the company is able not only to form forecasts of its financial condition, but also to solve such operational problems as attracting borrowed funds and additional investments. Thus, IFRS 16 is an application tool for companies accounting in accordance with international financial reporting standards, which contains detailed guidance for preparers. Using the approach laid down in the standard, a company can carry out high-quality financial accounting of its fixed assets and provide reporting users with the most detailed information regarding this section of the financial statements.

Balance		Gains and losses report
Index	Amount, million units	Index	Amount, thousand rubles
a) as deferred income
(RUB 100 million – CU 10 million)	90	Depreciation expenses	(10)
Deferred income as part of liabilities (20 – 2)	(18)	Other income/government subsidies	2
b) as a decrease in the value of the asset by the amount of the subsidy
Fixed asset within assets (RUB 80 million – CU 8 million)	72	Depreciation expenses	(8)

Dt sch. The main thing	10 cu.
K-t sch. Revaluation reserve	10 cu.

date	Assets	Reserve revaluation	Profit report and losses	A comment
01.01.00	100	—		The revaluation is credited to the revaluation reserve account (Russian equivalent of account 83) D-Fixed assets 30 Set Reserve revaluation 30
31.12.00	130	30
01.01.01	130	30		The depreciation of fixed assets, within the previously reflected revaluation, is covered by the previously created revaluation reserve. D-t Revaluation reserve 20 Fixed assets 20
	(20)	20)
31.12.01	110	10
01.01.02	110	10		The markdown is covered by the revaluation reserve, but only in the amount of the previously recognized revaluation (No. 1) D-t Revaluation reserve 10 Fixed assets 10 The remainder of the discount (16 – 10) is written off as expenses for the period D-t F2 / impairment loss 6 K-Fixed assets 6
	(16)	(10) №1	(6) №2
31.12.02	94	—
01.01.03	94	—		The additional valuation, within the limits of the previously reflected markdown, is reflected in the income statement as “compensation” for the previously shown markdown (No. 1): D-Fixed assets 6 K F2 / compensation for impairment loss 6 The difference (18 – 6) is written off to the revaluation reserve account, like a regular revaluation (No. 2): D-Fixed assets 12 Set Revaluation reserve 12
	18	12 №2	6 №1
31.12.03	112	12

	Assets	Profit and Loss Statement	Revaluation reserve	Retained earnings	Prim
Book value	1 000
Depreciation for the year to 31 December 2004	(200)	(200)
Book value based on historical cost	800
Revaluation	100		100
31 Dec 2004	900		100		2

Book value	900		100
Depreciation for the year to 31 December 2005	(225)	(225)			3
Book value up to revaluation	675
Revaluation	125		125
Realization of the revaluation amount			(25)	25	4
December 31, 2005	800		200

How now to determine the initial cost of fixed assets according to IFRS. How to now determine the initial cost of fixed assets according to IFRS International Financial Reporting Standard IAS 16

INTERNATIONAL FINANCIAL REPORTING STANDARD (IAS) 16 "FIXED ASSETS"

IFRS 16 (ias 16) Property, Plant and Equipment

Definitions

How can we now determine the initial cost of fixed assets according to IFRS?

Valuation of fixed assets

Depreciation

Derecognition of an asset

Information disclosure

IAS 16 Property, Plant and Equipment

Fixed assets (IFRS IAS) 16)

3 Accounting for fixed assets (IFRS 16)

Definition of fixed assets

Criteria and features of recognition of fixed assets

The concept of “group of fixed assets”

Initial valuation of an item of fixed assets

Subsequent costs associated with fixed assets

Accounting for property, plant and equipment after initial recognition

Requirements for conducting and reflecting revaluations of fixed assets

Depreciation of fixed assets

Disposal of fixed assets

Reflection of fixed assets in reporting

Disclosure requirements under IAS 16

Analogue of IFRS (IAS) 16 in Russian accounting practice

Tests

IFRS IAS 16 General information

IFRS 16 in basic definitions

Recognition of an asset as a property, plant and equipment according to IFRS 16

Depreciation of fixed assets according to IFRS 16

Depreciation methods for fixed assets IFRS 16

Unfair actions of financiers in working with fixed assets

Decrease in the carrying amount of an asset

Disclosure of information according to IFRS IAS 16 Fixed Assets

Conclusions and Conclusion

INTERNATIONAL FINANCIAL REPORTING STANDARD (IAS) 16
"FIXED ASSETS"