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Workpaper template

WorkpaperIAS 16 — Property, Plant and EquipmentL1 · L2 · L3

Initial recognition and cost of acquisition

2 missions12 sections to document60 min
Prepared by
AI-assisted draft
Reviewed by
Not reviewed — human review required
Status
Published

Objective of the workpaper

Document the initial recognition of an item of property, plant and equipment: enter the invoice and contract data, qualify the item and its unit of account, determine the initial cost (net purchase price and directly attributable costs), complete the dismantling, deferred payment or exchange sections when they apply, then conclude and record the entries. Every amount is linked to supporting evidence.

12 sections · 51 blocks · 8 calculations · 2 entries

  • IAS 16 §7
  • IAS 16 §8
  • IAS 16 §9
  • IAS 16 §10
  • IAS 16 §15
  • IAS 16 §16
  • IAS 16 §17
  • IAS 16 §18
  • IAS 16 §23
  • IAS 16 §24
  • IAS 16 §25
  • IAS 16 §26

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.

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

File and entity
Acquisition of a machining centre
Case tasks documented here
  • Does the machine meet the definition of property, plant and equipment and the recognition criteria? On what basis is it measured initially?
  • Determine the initial cost of the machine and the total expenditure to be recognised as an expense.
1

Inputs

Inputs

  • Description of the item acquired and its intended use

    TextRequired

  • Acquisition date (transfer of control)

    DateRequired

  • Invoiced purchase price, excluding taxes

    NumberRequired

    240,000

  • Trade discounts

    Number

    12,000

  • Rebates

    Number

  • Import duties

    Number

  • Non-refundable purchase taxes

    Number

  • Recoverable taxes (receivable, excluded from cost)

    Number

    45,600

  • Site preparation

    Number

    9,000

  • Initial delivery and handling

    Number

    6,000

  • Installation and assembly

    Number

    14,000

  • Testing whether the asset functions properly

    Number

    3,000

  • Professional fees

    Number

    5,000

  • Employee benefits arising directly from the acquisition or construction

    Number

  • Amount due to the supplier (invoice including taxes)

    Number

    273,600

  • Costs settled in cash

    Number

    37,000

2

Supporting evidence

Evidence

  • Evidence obtained and referenced (category, document reference)

    EvidenceRequired

3

Recognition and unit of account

Analysis

IAS 16 §7IAS 16 §8IAS 16 §9IAS 16 §10

  • Recognition criteria

    ChecklistRequired

    • Future economic benefits are probable
    • Cost can be measured reliably

  • Classification of the item

    JudgmentRequired

    Item of property, plant and equipment / Inventory or consumable / Outside the scope of the standard

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

  • Unit of account retained

    Judgment

    Single item / Individually insignificant items aggregated

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

4

Initial cost

Calculations

IAS 16 §15IAS 16 §16IAS 16 §17

  • Net purchase price

    CalculationRequired

    228,000

    Invoiced purchase price, excluding taxes ; − Trade discounts ; − Rebates ; Import duties ; Non-refundable purchase taxes

  • Total directly attributable costs

    CalculationRequired

    37,000

    Site preparation ; Initial delivery and handling ; Installation and assembly ; Testing whether the asset functions properly ; Professional fees ; Employee benefits arising directly from the acquisition or construction

  • Initial cost of the asset

    CalculationRequired

    265,000

    Net purchase price ; Total directly attributable costs ; Present value of dismantling ; Cash price equivalent of the deferred part

5

Dismantling and restoration

Calculations

IAS 16 §16IAS 16 §18

  • Estimated future dismantling cost

    Number

  • Annual discount rate

    Number

  • Number of years until dismantling

    Number

  • Dismantling obligation and estimate

    Judgment

    Obligation exists, included in cost / No obligation to include

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

  • Present value of dismantling

    Calculation

    Estimated future dismantling cost ; Annual discount rate ; Number of years until dismantling

6

Payment deferred beyond normal credit terms

Calculations

IAS 16 §23

  • Nominal amount payable beyond normal credit terms

    Number

  • Annual discount rate

    Number

  • Number of years deferred

    Number

  • Cash price equivalent of the deferred part

    Calculation

    Nominal amount payable beyond normal credit terms ; Annual discount rate ; Number of years deferred

7

Acquisition through an exchange of assets

Calculations

IAS 16 §24IAS 16 §25IAS 16 §26

  • Fair value of the asset given up

    Number

  • Cash paid

    Number

  • Gross carrying amount of the asset given up

    Number

  • Accumulated depreciation of the asset given up

    Number

  • Commercial substance of the exchange

    Judgment

    Commercial substance and reliable fair value / Measured at the carrying amount of the asset given up

    Without commercial substance or a reliable fair value, cost is the carrying amount of the asset given up: document it in the rationale and in a review note.

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

  • Cost of the asset received (fair value given up and cash)

    Calculation

    0

    Fair value of the asset given up ; Cash paid

  • Gain on the asset given up

    Calculation

    0

    Fair value of the asset given up ; − Gross carrying amount of the asset given up ; Accumulated depreciation of the asset given up

  • Loss on the asset given up

    Calculation

    0

    Fair value of the asset given up ; − Gross carrying amount of the asset given up ; Accumulated depreciation of the asset given up

8

Journal entries

Entries

  • Acquisition entry

    EntryRequired

    AccountDebitCredit
    Asset at initial cost265,000
    Recoverable taxes45,600
    Trade payable273,600
    Costs settled in cash37,000

  • Asset exchange entry

    Entry

    Debit Asset received ← Cost of the asset received (fair value given up and cash) ; Debit Depreciation of the asset given up ← Accumulated depreciation of the asset given up ; Debit Loss on disposal ← Loss on the asset given up ; Credit Asset given up (gross) ← Gross carrying amount of the asset given up ; Credit Cash paid ← Cash paid ; Credit Gain on disposal ← Gain on the asset given up

9

Costs to capitalise

Judgment

IAS 16 §15IAS 16 §16IAS 16 §17

  • Are the costs entered directly attributable?

    JudgmentRequired

    All directly attributable / Some costs excluded (see the capitalise / expense workpaper)

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

10

Conclusion

Conclusion

  • Conclusion on recognition and the initial cost retained

    ConclusionRequired

11

Impact on the financial statements

FS impact

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

    TableRequired

12

Normative references

References

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

    References

13

Checks and financial statement impact

  • The initial cost is determinedPass
  • The acquisition entry balancesPass
  • The exchange entry balancesNot evaluated
Assets
273,600
Liabilities
273,600
Profit or loss
0
OCI
0
Equity
0