Difference Between AS 10 and Ind AS 16

Accounting Standard 10 (Property, Plant and Equipment (PPE): The objective of this Standard is to prescribe accounting treatment for Property, Plant and Equipment (PPE). now check difference between IndAS 16 and AS 10 from below...

Definition of PPE: PPE are tangible items that-

  • (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
  • (b) are expected to be used during more than a period of twelve months.

As per the definition, PPE also includes investment properties and assets held for administrative purpose.

A minimum holding period of 12 months is specified. Therefore, even if an asset is producing or supplying goods or services, but is not held for more than 12 months, then it is not PPE.

Ind AS 16: Property, Plant and Equipment

The objective of Ind AS 16 is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to them.

Property, plant and equipment are tangible items that:

  • (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
  • (b) are expected to be used during more than one period

The cost of an item of property, plant and equipment should be recognised as an asset if, and only if:

  • (a) it is probable that future economic benefits associated with the item will flow to the entity; and
  • (b) the cost of the item can be measured reliably.

Entities accounting for investment property in accordance with Ind AS 40, Investment Property are required to use the cost model in this Standard.

Items such as spare parts, stand-by equipment and servicing equipment are recognised in accordance with this Ind AS when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory.

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Difference Between AS 10 and Ind AS 16

Basis of Differences IND AS 16 Amended AS 10
Fixed Assets retired from Active Use and Held for Sale Ind AS 16 does not deal with the assets ‘held for sale’ because the treatment of such assets is covered in Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. Deals with accounting for items of fixed assets retired from active use and held for sale.
Stripping Costs in the Production Phase of a Surface Mine Provides guidance on measuring ‘Stripping Costs in the Production Phase of a Surface Mine’. Does not contain this guidance.