IAS 16

In this lesson

1. 0:00 Non-current assets overview
2. 0:16 Property plant and equipment definition
3. 0:42 Recognition criteria for PPE assets
4. 1:04 Initial measurement and capitalisation rules
5. 1:54 Costs that cannot be capitalised
6. 2:38 Cost model versus revaluation model
7. 3:27 Revaluation process and accounting treatment
8. 4:12 Depreciation principles and useful life
9. 5:35 Straight-line depreciation worked example
10. 6:30 Reducing balance depreciation method
11. 8:46 Capitalisation of factory construction costs
12. 10:40 Component depreciation for complex assets
13. 12:06 Derecognition and disposal of assets

About this lesson

You'll discover how to capitalise initial costs, choose between the cost and revaluation models, calculate depreciation using different methods, and handle asset components and disposals. By mastering these principles, you'll confidently tackle PPE questions on your exam and understand how fixed assets are valued and presented in financial statements. The session covers the full lifecycle of property, plant and equipment. You'll start with recognition criteria and initial measurement, learning which costs can be capitalised (like professional fees and dismantling costs) and which cannot (such as general overheads and training). You'll then explore the two measurement models available: the cost model, where assets are held at cost less depreciation and impairment, and the revaluation model, where assets are revalued to fair value at regular intervals. The session explains when and how to apply each approach. Depreciation is explored in depth, with worked examples showing how to calculate charges using the straight-line method and the reducing balance method. You'll see how depreciation begins when an asset is available for use and continues until disposal, and understand why the depreciation method should reflect how the asset's economic benefits are consumed. The session also covers component accounting — treating different parts of complex assets separately when they have different useful lives — and the derecognition process when assets are sold or withdrawn from use. Finally, you'll learn the disclosure requirements for PPE, including how to present carrying amounts, depreciation methods, useful lives, and movements during the period. This knowledge ensures your financial statements comply with IAS 16 and helps you answer both computational and narrative questions on your qualification exams.

Duration: 14m