IAS 16Chapter 10Lesson 1
Derecognising an item of property, plant and equipment: triggers, gain or loss, date, consideration, special cases
Step 1 of 8Learning objectives
Go deeper+2 deeper insights · +1 calculation · +1 journal entry · +1 point of attention
When an item of property, plant and equipment leaves the balance sheet: on disposal (sale, finance lease, donation) or when no benefits are expected from it any more. The gain or loss equals the net disposal proceeds less the carrying amount; it goes to profit or loss and is never revenue. The date of disposal and the consideration follow IFRS 15; two special cases: assets held for rental and routinely sold (transfer to inventories) and sale and leaseback (IFRS 16).
35 minNot started
Learning objectives
- Identify the events that lead to the derecognition of an item of property, plant and equipment, including scrapping without a sale.
- Calculate the gain or loss on disposal, after depreciation up to the date of disposal, and record the entries.
- Explain why the gain on disposal is not revenue, and recognise the exception for assets held for rental and routinely sold.
- Date the disposal by the transfer of control and measure deferred or variable consideration by applying IFRS 15.
- Recognise that a sale and leaseback falls under IFRS 16 and not under the IAS 16 calculation alone.