Archive / 1.05 Property, Plant and Equipment

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Change in residual value

Whilst we have discussed the term ‘residual value’, we haven’t really approached the matter of this being changed. An asset’s residual value is an estimate the management makes using it’s best knowledge of the asset, it’s condition, it’s possible market at the end of it’s useful life, how extensively it will be used and so […]

Non-refundable taxes, duties

Acquiring property, plant and equipment items means that you have pay up a considerable amount sometimes not for the asset itself but for say import duties. That’s an expense you incurred to acquire the asset, to be able to start using it (otherwise they’d held it at the customs). (more…)

Acquisiton cost of a PPE item

Acquisition cost of a PPE item is important. It’s a value an asset is initially recognized on the face of a balance sheet and furthermore is depreciated into expenses over a period of time. As it impacts both the amount you carry within your company’s assets and your expenses over a period of time, it’s […]

Writing down assets in their value

An asset is written down in value if and only if the recoverable amount identified is lower of the assets carrying value recognized within the books. On the basis of the test for an impairment you’ve identified the assets recoverable amount (as mentioned earlier it’s highest of either the ‘value in use’ or ‘fair value […]