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IAS 16Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5
WorkpaperIAS 16 — Property, Plant and EquipmentL2 · L3 · L4

Component approach

4 missions9 sections to document45 min
Prepared by
AI-assisted draft
Reviewed by
Not reviewed — human review required
Status
Published

Objective of the workpaper

Allocate the cost of the asset between land and the significant components, with the useful life and residual value of each; the table must add up to the total cost. When a component is replaced or a major inspection is performed, complete the dedicated section: the new cost is capitalised and the carrying amount of the replaced part is derecognised.

9 sections · 17 blocks · 3 calculations · 1 entry

  • IAS 16 §13
  • IAS 16 §14
  • IAS 16 §43
  • IAS 16 §44
  • IAS 16 §45
  • IAS 16 §46
  • IAS 16 §47
  • IAS 16 §58
  • IAS 16 §59
  • IAS 16 §70

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

4 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Logistics warehouse: components and replacement
Case tasks documented here
  • Which elements of the purchase price must be recognised and depreciated separately? Is the land depreciated?
  • Calculate the annual depreciation charge for the warehouse for 20X1 to 20X5.
  • Calculate the carrying amount of the old system to be derecognised on 2 January 20X6.
  • What journal entries do you record in 20X6?
1

Inputs

Inputs

  • Asset and technical breakdown available

    TextRequired

  • Total cost of the asset (land included)

    NumberRequired

    2,000,000

  • Land (accounted for separately, not depreciated save exceptions)

    Number

    500,000

2

Supporting evidence

Evidence

  • Evidence obtained and referenced (category, document reference)

    EvidenceRequired

3

Identification of components

Analysis

IAS 16 §43IAS 16 §44IAS 16 §45IAS 16 §46IAS 16 §47IAS 16 §58IAS 16 §59

  • Significant components (cost, useful life, residual value)

    TableRequired

    1,030,000 · 40 · 50,000 | 150,000 · 15 | 180,000 · 12 | 120,000 · 10 | 20,000 · 5

  • Breakdown into components

    JudgmentRequired

    Significant parts depreciated separately / Grouping justified (same useful life and pattern)

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

4

Depreciation by component

Calculations

IAS 16 §43IAS 16 §44

  • Total cost of the components

    CalculationRequired

    1,500,000

    Significant components (cost, useful life, residual value)

  • Total annual charge

    CalculationRequired

    65,500

    Significant components (cost, useful life, residual value)

5

Replacement of a component or major inspection

Calculations

IAS 16 §13IAS 16 §14IAS 16 §70

  • Cost of the replaced component

    Number

  • Accumulated depreciation of the replaced component

    Number

  • Cost of the new component or inspection

    Number

  • Carrying amount derecognised

    Calculation

    0

    Cost of the replaced component ; − Accumulated depreciation of the replaced component

6

Journal entries

Entries

  • Replacement: new component and derecognition of the old one

    Entry

    Debit New component ← Cost of the new component or inspection ; Debit Depreciation of the old component ← Accumulated depreciation of the replaced component ; Debit Carrying amount derecognised ← Carrying amount derecognised ; Credit Old component (gross) ← Cost of the replaced component ; Credit Payment ← Cost of the new component or inspection

7

Conclusion

Conclusion

  • Conclusion on the components retained and their depreciation

    ConclusionRequired

8

Impact on the financial statements

FS impact

  • Impact by heading, derived from the entries above (the Notes row points to the disclosures)

    TableRequired

9

Normative references

References

  • Paragraphs cited in this workpaper (verification status shown from the registry)

    References

10

Checks and financial statement impact

  • Components and land add up to the total costPass
  • The replacement entry balancesNot evaluated
Assets
0
Liabilities
0
Profit or loss
0
OCI
0
Equity
0