Requirement 1
Type of non-current Asset
Examples
How they are required to be measured once recognised by an entity under IAS
Fixed Assets
Plant, Property and Equipment
Initial:
· Under IAS 16 PPE is measured under its present value purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.[footnoteRef:1] [1: International Accounting Standards Board (2015) IFRS Part A, IAS 16 (Plant, Property and Equipment) pages A628 – A633]
· Also included under IAS 16 any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner indented by management (eg. Cost of site preparation, initial delivery and handling costs).
Subsequent:
· Use cost model: according to IAS 16 initial cost less any accumulated depreciation and any accumulated impairment losses.
· Or revaluation model: according to IAS 16 reliably measurable fair value less any accumulated depreciation and accumulated impairment losses. If this method is followed, all assets in the same class must be revalued frequently using market professionals.
Long Term Investments (to be held >1 year)
Bonds, investments in another company.
Initial:
· According to IAS 40 Initial measurement shall be at cost of the asset including its purchase price and any directly attributable expenditure, including professional fees, property transfer taxes and other transaction costs. [footnoteRef:2] [2: International Accounting Standards Board (2015) IFRS Part A, IAS 40 (investment Property) pages A1142 – A1154]
· This initial cost is not increased by: most start-up costs, operating losses incurred before the investment achieves planned occupancy or abnormal amounts of wasted resources.
Subsequent:
· Use fair value model: measuring fair value of investment property in accordance with IFRS 13[footnoteRef:3], the entity needs to ensure that it reflects the rental income from current leases and other market assumptions used when pricing investment property under current market conditions. However in some cases it is not always possible to reliably measure fair value, when the comparable market is inactive and there are no alternative reliable measurements of fair value available. In this case measure under cost until fair value become reliably measurable or use cost model.[footnoteRef:4] [3: International Accounting Standards Board (2015) IFRS Part A, IFRS 13 (Fair Value) page A421] [4: ICAEW. (2013). Financial Accounting and Reporting Study Manual, Intangible Assets page 233]
· Or cost model: this model requires all investment property to be measured according to IAS 16.
Intangible Assets
Goodwill, Copyrights and Patents
Initial:
· According to IAS 38, intangible assets are to be measured initially at their cost which is the purchase price plus any directly attributable costs including: legal and professional fees, costs of direct employees and the costs of testing...
