(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009Section 17Property, Plant and EquipmentScope17.1 This section applies to accounting for property, plant and equipment andinvestment property whose fair value cannot be measured reliably without unduecost or effort. Section 16 Investment Property applies to investment property whosefair value can be measured reliably without undue cost or effort.17.2 Property, plant and equipment are tangible assets that:(a)(b)are held for use in the production or supply of goods or services, for rentalto others, or for administrative purposes, andare expected to be used during more than one period.17.3 Property, plant and equipment does not include:(a)(b)biological assets related to agricultural activity (see Section 34 SpecialisedActivities), ormineral rights and mineral reserves, such as oil, natural gas and similarnon-regenerative resources.Recognition17.4 An entity shall apply the recognition criteria in paragraph 2.27 in determiningwhether to recognise an item of property, plant or equipment. Therefore, theentity shall recognise the cost of an item of property, plant and equipment as anasset if, and only if:(a)(b)it is probable that future economic benefits associated with the item willflow to the entity, andthe cost of the item can be measured reliably.17.5 Spare parts and servicing equipment are usually carried as inventory andrecognised in profit or loss as consumed. However, major spare parts andstand-by equipment are property, plant and equipment when an entity expects touse them during more than one period. Similarly, if the spare parts and servicingequipment can be used only in connection with an item of property, plant andequipment, they are considered property, plant and equipment.17.6 Parts of some items of property, plant and equipment may require replacement atregular intervals (eg the roof of a building). An entity shall add to the carryingamount of an item of property, plant and equipment the cost of replacing part ofsuch an item when that cost is incurred if the replacement part is expected toprovide incremental future benefits to the entity. The carrying amount of thoseparts that are replaced is derecognised in accordance with paragraphs 17.27–17.30.92 © IASCF