IAS 16Chapter 6Lesson 1
Choosing the measurement model; the cost model; changes in decommissioning liabilities
Step 1 of 10Learning objectives
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After initial recognition, the entity chooses, class by class, between the cost model and the revaluation model. The cost model presents the asset at cost less accumulated depreciation and impairment losses. When the decommissioning provision is revised, the IFRIC 1 interpretation adjusts the cost of the asset and future depreciation. A specific option concerns owner-occupied property backing insurance contracts with direct participation features.
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Learning objectives
- Identify the two measurement models after recognition and explain why the choice applies to an entire class.
- Calculate and explain the carrying amount under the cost model.
- Determine the effect of a revision of the decommissioning provision on the asset, recalculate depreciation and record the entry (cost model).
- Recognise the option available for owner-occupied property backing insurance contracts with direct participation features.