Property, plant and equipment note is one of those few notes presented as reflecting movements for both current and prior period. Bear in mind that it’s not only the total balance the figures are presented for, but subgroups as well (i.e. “land and buildings”, “machinery and equipment”, etc.). The way the note is build up is having the subgroups as columns in which brought forward balances are followed by movements and ending in carried forward balances. Note here that the carried forward balance of the prior period is the brought forward balance of current period. They must equal.
The balances always shown for each of the subgroup are the cost value, accumulated depreciation and carrying value (cost value less accumulated depreciation). They are the brought and carried forward balances we’re talking about.
The movements (and their effect), which usually are present, are as follows:
- Additions – increase the cost value of the subgroup the asset was added to;
- Depreciation charge – increases accumulated depreciation of the subgroup the expense is charged;
- Write-offs and sales – decrease the cost value of the subgroup the asset was in by the amount the asset’s cost value was and decrease accumulated depreciation of the subgroup by the amount the asset’s accumulated depreciation was;
- Revaluations – increase or decrease the cost value depending on if the new value is higher or lower than the previous one (only applicable for land and buildings measured at fair value).
Something to also disclose in the note is the sales price of the sold assets (just the total for all sold assets and not separately). If it’s not significant or no sales were made it’s not worth it, but if you’ve made a considerable sale, it’s suggested to disclose this information as well. Also, if you’ve got unpaid balances for PPE items at the balance sheet date that are significant it’s also suggested to disclose the amount of those unpaid balances in this note.
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