Property, plant and equipment (PPE) is considered as a non-monetary asset on your balance sheet. In case you acquired it with foreign currency, it’s treated as any other non-monetary asset intially accounted in foreign currency at the balance sheet date. Continue reading
Category Archives: 1.5.2 Initial Recognition
Measuring land from purchased property
First question you may have is “Why would I do this?” Think about depreciation and if land is depreciated in the accounting framework used in your country. If yes, maybe it’s a relevant question. That is if the useful lives are also deemed to be the same as for buildings on top of the land in question. Continue reading
What should the capitalization level be for PPE items?
Initially, when acquiring an asset, you account the purchase amount to your PPE ledger and balance sheet. Question is however, from what sum should you start accounting purchases (namely assets and not services obviously) as items of PPE? Continue reading
Initial recognition of property, plant and equipment (PPE)
Be the reasons what they may, the management has decided to purchase an asset. It has agreed on a budget and also made certain person responsible for acquiring it. The very moment your company possesses the rights and obligations to the asset, is the moment you recognize the asset on your balance sheet.
Not taking into account any future or subsequent measurement considerations you simply recognize the asset in its cost value. Provided you have not yet paid to the supplier, the entry is as follows:
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