IAS 16: Property, Plant, and Equipment
Dissertation
(ICB Member ID: )
Submitted in partial fulfilment of the requirements for the National Diploma:
FINANCIAL ACCOUNTING:
(SAQA ID: 20366)
30 March 2023
DECLARATION BY STUDENT:
I declare that this min-dissertation submitted by me, is my own work, that I have referenced
all the sources that I have used, and that no part was previously submitted at any tertiary
institution.
Signature: Date:
,Acknowledgments
I wish to express my gratitude to the following two people, of whom I could not have
undertaken this journey.
My Supervisor, for his guidance and financial support, and my darling Mother, for her
endless belief in my abilities and keeping my spirits high.
i
,Abstract
The International Financial Reporting Standards (IFRS) have developed accounting
principles and rules, the IFRS is becoming the global standard for the preparation of an
entity's financial statements. These accounting standards provide a basis for the preparation
and presentation of financial statements, they ensure the financial information presented to
investors, lenders, government, financial institutions, employees and stakeholders meet the
information needs and they are reliable, relevant, comparable, and understandable.
The International accounting standard for IAS 16 Property, plant, and equipment (PPE),
represents a major asset in the financial statements. The standard prescribes the treatment
for PPE for users of financial statements to access information about an entity's investment
in PPE and changes in such investment. The standard covers the recognition of items of
PPE, calculations of the carrying amounts, and the calculations of any depreciation charges
and any applicable impairment losses.
This dissertation aims to summarise international critique, both positive and negative
concerning the IAS 16: Property, Plant, and Equipment and to provide international
recommendations on how the standard can be improved.
This research dissertation is based on secondary research and uses reliable secondary
research and qualitative research approaches to collect all the data.
ii
, Table of Content
Acknowledgments.................................................................................................................................... i
Abstract ................................................................................................................................................... ii
Table of Content .................................................................................................................................... iii
Abbreviations .......................................................................................................................................... 1
Chapter 1: Introduction .......................................................................................................................... 2
1.1 Background to the Study............................................................................................................... 2
1.2 IAS 16 – Brief overview ................................................................................................................. 2
1.3 Aims and objective of this study ................................................................................................... 3
Chapter 2: Literature Review .................................................................................................................. 4
2.1 Introductions ................................................................................................................................. 4
2.2 Key terms: IAS 16 .......................................................................................................................... 5
2.3 Class of Property, plant, and equipment ...................................................................................... 5
2.4 Recognition Process ...................................................................................................................... 6
2.5 Derecogintion of PPE – IAS 16....................................................................................................... 6
2.6 Disclosures .................................................................................................................................... 7
Chapter 3: Positive International critique concerning the standard (perceived strengths) ................. 10
3.1 Capital expenditures ................................................................................................................... 12
3.2 Accumulated depreciation .......................................................................................................... 14
3.3 Revaluation model definition...................................................................................................... 15
Chapter 4 Negative International critique concerning the standard (perceived weaknesses). ........... 20
4.1 The financial impact of PPE ......................................................................................................... 20
4.2 Unit of measure for recognition ................................................................................................. 21
4.3 Bearer Plants ............................................................................................................................... 27
Chapter 5 Practical Examples ................................................................................................................ 32
5.1 Example 1: BP.............................................................................................................................. 32
5.2 Example 2: Semrush Holdings ..................................................................................................... 33
Chapter 6: Finding and Recommendations .......................................................................................... 34
6.1 Conclusions ................................................................................................................................. 35
Bibliography ........................................................................................................................................ 37
Tables, Charts, and Graphs .................................................................................................................. 40
iii
Dissertation
(ICB Member ID: )
Submitted in partial fulfilment of the requirements for the National Diploma:
FINANCIAL ACCOUNTING:
(SAQA ID: 20366)
30 March 2023
DECLARATION BY STUDENT:
I declare that this min-dissertation submitted by me, is my own work, that I have referenced
all the sources that I have used, and that no part was previously submitted at any tertiary
institution.
Signature: Date:
,Acknowledgments
I wish to express my gratitude to the following two people, of whom I could not have
undertaken this journey.
My Supervisor, for his guidance and financial support, and my darling Mother, for her
endless belief in my abilities and keeping my spirits high.
i
,Abstract
The International Financial Reporting Standards (IFRS) have developed accounting
principles and rules, the IFRS is becoming the global standard for the preparation of an
entity's financial statements. These accounting standards provide a basis for the preparation
and presentation of financial statements, they ensure the financial information presented to
investors, lenders, government, financial institutions, employees and stakeholders meet the
information needs and they are reliable, relevant, comparable, and understandable.
The International accounting standard for IAS 16 Property, plant, and equipment (PPE),
represents a major asset in the financial statements. The standard prescribes the treatment
for PPE for users of financial statements to access information about an entity's investment
in PPE and changes in such investment. The standard covers the recognition of items of
PPE, calculations of the carrying amounts, and the calculations of any depreciation charges
and any applicable impairment losses.
This dissertation aims to summarise international critique, both positive and negative
concerning the IAS 16: Property, Plant, and Equipment and to provide international
recommendations on how the standard can be improved.
This research dissertation is based on secondary research and uses reliable secondary
research and qualitative research approaches to collect all the data.
ii
, Table of Content
Acknowledgments.................................................................................................................................... i
Abstract ................................................................................................................................................... ii
Table of Content .................................................................................................................................... iii
Abbreviations .......................................................................................................................................... 1
Chapter 1: Introduction .......................................................................................................................... 2
1.1 Background to the Study............................................................................................................... 2
1.2 IAS 16 – Brief overview ................................................................................................................. 2
1.3 Aims and objective of this study ................................................................................................... 3
Chapter 2: Literature Review .................................................................................................................. 4
2.1 Introductions ................................................................................................................................. 4
2.2 Key terms: IAS 16 .......................................................................................................................... 5
2.3 Class of Property, plant, and equipment ...................................................................................... 5
2.4 Recognition Process ...................................................................................................................... 6
2.5 Derecogintion of PPE – IAS 16....................................................................................................... 6
2.6 Disclosures .................................................................................................................................... 7
Chapter 3: Positive International critique concerning the standard (perceived strengths) ................. 10
3.1 Capital expenditures ................................................................................................................... 12
3.2 Accumulated depreciation .......................................................................................................... 14
3.3 Revaluation model definition...................................................................................................... 15
Chapter 4 Negative International critique concerning the standard (perceived weaknesses). ........... 20
4.1 The financial impact of PPE ......................................................................................................... 20
4.2 Unit of measure for recognition ................................................................................................. 21
4.3 Bearer Plants ............................................................................................................................... 27
Chapter 5 Practical Examples ................................................................................................................ 32
5.1 Example 1: BP.............................................................................................................................. 32
5.2 Example 2: Semrush Holdings ..................................................................................................... 33
Chapter 6: Finding and Recommendations .......................................................................................... 34
6.1 Conclusions ................................................................................................................................. 35
Bibliography ........................................................................................................................................ 37
Tables, Charts, and Graphs .................................................................................................................. 40
iii
