Indian Accounting Standard (Ind AS) 16: Property, Plant and Equipment

Practice fill-in-the-blank flashcards covering the core principles, recognition, measurement, depreciation, derecognition, and decommissioning provisions under Ind AS 16.

Ind AS 16 applies to accounting for property, plant and equipment, but excludes biological assets related to agricultural activity other than __________.

bearer plants

A living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period, and has a remote likelihood of being sold as agricultural produce except for incidental scrap sales is defined as a __________.

bearer plant

The recoverable amount of an asset is defined as the higher of an asset’s fair value less costs of disposal and its __________.

value in use

The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the entity and __________.

the cost of the item can be measured reliably

Items such as spare parts, stand-by equipment, and servicing equipment are recognized as property, plant and equipment when they meet the definition of PPE; otherwise, they are classified as __________.

inventory

Items of PPE acquired for safety or environmental reasons qualify for recognition as assets because they enable an entity to derive __________ from related assets in excess of what could be derived had those items not been acquired.

future economic benefits

Costs of day-to-day servicing of an item of PPE, such as labour and consumables, are recognized in __________ as incurred.

profit or loss

When a major inspection is performed and its cost is capitalized into the carrying amount of an item of PPE, any remaining carrying amount of the cost of the __________ is derecognized.

previous inspection

Under Ind AS 16, any excess of net sale proceeds of items produced over the cost of testing shall not be recognized in profit or loss, but must be deducted from the __________.

directly attributable costs

If payment for an item of property, plant and equipment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognized as __________ over the period of credit unless capitalized under Ind AS 23.

interest

If an exchange transaction of PPE lacks commercial substance or the fair value of neither asset received nor asset given up is reliably measurable, the acquired asset’s cost is measured at the __________ of the asset given up.

carrying amount

When an item of property, plant and equipment is revalued, the __________ to which that asset belongs shall be revalued.

entire class

An initial increase in an asset’s carrying amount as a result of a revaluation shall be recognized in other comprehensive income and accumulated in equity under the heading of __________.

revaluation surplus

A revaluation increase shall be recognized in profit or loss to the extent that it reverses a __________ of the same asset previously recognized in profit or loss.

revaluation decrease

When an asset is used by an entity, the amount of revaluation surplus transferred to retained earnings is the difference between depreciation based on the revalued carrying amount and depreciation based on the asset’s __________.

original cost

Each part of an item of property, plant and equipment with a cost that is __________ in relation to the total cost of the item should be depreciated separately.

significant

With exceptions such as quarries and sites used for landfill, land has an __________ useful life and therefore is not depreciated.

unlimited

Depreciation of an asset begins when it is __________, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

available for use

Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale under Ind AS 105 and the date that the asset is __________.

derecognized

A depreciation method that is based on __________ that is generated by an activity that includes the use of an asset is not appropriate.

revenue

Gains arising from the derecognition of an item of property, plant and equipment shall not be classified as __________.

revenue

Under Appendix A to Ind AS 16, under the cost model, if a decrease in the decommissioning liability exceeds the carrying amount of the asset, the excess is recognized immediately in __________.

profit or loss

Under Appendix A to Ind AS 16, the periodic unwinding of the discount on a decommissioning liability must be recognized in profit or loss as a __________ as it occurs.

finance cost

Unlike Ind AS 16 which deducts testing proceeds from the cost of PPE, the amended IAS 16 has __________ deduction of proceeds of items produced during testing from the cost of an item of PPE.

prohibited