Current critiques that exist with respect of Property plant and Equipment (IAS16)
Dissertation
By NAME
ICB Member ID : STUDENT NUMBER
Submitted in partial fulfilment of the requirements for the National Diploma:
FINANCIAL ACCOUNTING
(SAQA ID : 20366)
MONTH
DECLARATION BY STUDENT:
I declare that this min-dissertation submitted by me, is my own work, that l have referenced all the
sources that l have used and that no part was previously submitted at any tertiary institution.
Signature : Date : SUBMISSION DATE
Page 1 of 44
,Contents
Acknowledgements...............................................................................................................................4
1.0 Research Overview..........................................................................................................................6
1.1 Abstract.......................................................................................................................................6
1.2 Purpose........................................................................................................................................6
1.3 Research Method.........................................................................................................................6
1.4 Frame of Reference.....................................................................................................................7
1.5 Research Results and Analysis.....................................................................................................7
1.6 International Critiques Conclusion...............................................................................................8
Abbreviation..........................................................................................................................................9
2.0 Introduction...................................................................................................................................10
2.1 Background................................................................................................................................10
2.2 Problem Statement....................................................................................................................10
2.3 Purpose......................................................................................................................................11
2.4 Delimitation...............................................................................................................................11
2.5 Disposition.................................................................................................................................11
3.0 Methodology.................................................................................................................................12
3.1 Introduction...........................................................................................................................12
3.1 Research strategy......................................................................................................................12
3.1.1 Quantitative and Qualitative Research strategy Comparisons............................................12
4: Literature Review.............................................................................................................................14
4.1 Brief overview of IAS 16.............................................................................................................14
4.1.1 Objective of Property, Plant and Equipment IAS 16............................................................14
4.1.2 Scope of IAS 16...................................................................................................................14
4.1.3 Definition of Terms.............................................................................................................15
4.1.4 Recognition of Property plant and equipment....................................................................16
4.1.5 Initial and Subsequent measurement of PPE......................................................................17
4.1.6 Depreciation.......................................................................................................................22
4.1.7 Derecognition of PPE..........................................................................................................24
4.1.8 Presentation and Disclosure...............................................................................................25
4.2 Positive Critiques.......................................................................................................................25
4.3 Negative Critiques......................................................................................................................34
5.0 Practical problems encountered in accounting PPE by (Carthy, 2021)..........................................37
5.1 Item (I) Capitalisation of an item...............................................................................................37
Page 2 of 44
, 5.2 Item (II) - Derecognising a replaced part ...................................................................................37
5.3 Item (III) - Splitting an asset into component.............................................................................38
5.4 Item (IV) - Calculating residual values .......................................................................................38
6.0 Summary of international recommendations as to how the standard can be improved...............40
6.1 Deloitte Exposure Draft 27/4 PPE: Proceeds before intended use.............................................40
6.2 International conclusion on raised critiques..............................................................................41
Bibliography.........................................................................................................................................42
Page 3 of 44
, Acknowledgements
I would like to thank my lecturer for his, guidance and assistance with regards to this
dissertation. It has taken a lot of sacrifices, dedication, and hard work. I would also like to
thank my family for their assistance throughout my studies in also pushing me and assisting
me where I need help and for her prayers. Thank you also to all that have had a positive
impact in my life throughout this journey.
Lastly, I would like to thank my friends for encouragement and motivation for their
enticement to this Financial Accounting Diploma
Page 4 of 44
Dissertation
By NAME
ICB Member ID : STUDENT NUMBER
Submitted in partial fulfilment of the requirements for the National Diploma:
FINANCIAL ACCOUNTING
(SAQA ID : 20366)
MONTH
DECLARATION BY STUDENT:
I declare that this min-dissertation submitted by me, is my own work, that l have referenced all the
sources that l have used and that no part was previously submitted at any tertiary institution.
Signature : Date : SUBMISSION DATE
Page 1 of 44
,Contents
Acknowledgements...............................................................................................................................4
1.0 Research Overview..........................................................................................................................6
1.1 Abstract.......................................................................................................................................6
1.2 Purpose........................................................................................................................................6
1.3 Research Method.........................................................................................................................6
1.4 Frame of Reference.....................................................................................................................7
1.5 Research Results and Analysis.....................................................................................................7
1.6 International Critiques Conclusion...............................................................................................8
Abbreviation..........................................................................................................................................9
2.0 Introduction...................................................................................................................................10
2.1 Background................................................................................................................................10
2.2 Problem Statement....................................................................................................................10
2.3 Purpose......................................................................................................................................11
2.4 Delimitation...............................................................................................................................11
2.5 Disposition.................................................................................................................................11
3.0 Methodology.................................................................................................................................12
3.1 Introduction...........................................................................................................................12
3.1 Research strategy......................................................................................................................12
3.1.1 Quantitative and Qualitative Research strategy Comparisons............................................12
4: Literature Review.............................................................................................................................14
4.1 Brief overview of IAS 16.............................................................................................................14
4.1.1 Objective of Property, Plant and Equipment IAS 16............................................................14
4.1.2 Scope of IAS 16...................................................................................................................14
4.1.3 Definition of Terms.............................................................................................................15
4.1.4 Recognition of Property plant and equipment....................................................................16
4.1.5 Initial and Subsequent measurement of PPE......................................................................17
4.1.6 Depreciation.......................................................................................................................22
4.1.7 Derecognition of PPE..........................................................................................................24
4.1.8 Presentation and Disclosure...............................................................................................25
4.2 Positive Critiques.......................................................................................................................25
4.3 Negative Critiques......................................................................................................................34
5.0 Practical problems encountered in accounting PPE by (Carthy, 2021)..........................................37
5.1 Item (I) Capitalisation of an item...............................................................................................37
Page 2 of 44
, 5.2 Item (II) - Derecognising a replaced part ...................................................................................37
5.3 Item (III) - Splitting an asset into component.............................................................................38
5.4 Item (IV) - Calculating residual values .......................................................................................38
6.0 Summary of international recommendations as to how the standard can be improved...............40
6.1 Deloitte Exposure Draft 27/4 PPE: Proceeds before intended use.............................................40
6.2 International conclusion on raised critiques..............................................................................41
Bibliography.........................................................................................................................................42
Page 3 of 44
, Acknowledgements
I would like to thank my lecturer for his, guidance and assistance with regards to this
dissertation. It has taken a lot of sacrifices, dedication, and hard work. I would also like to
thank my family for their assistance throughout my studies in also pushing me and assisting
me where I need help and for her prayers. Thank you also to all that have had a positive
impact in my life throughout this journey.
Lastly, I would like to thank my friends for encouragement and motivation for their
enticement to this Financial Accounting Diploma
Page 4 of 44
