IAS 16 PPE
IAS 16 establishes principles for recognising property, plant and equipment as assets, measuring their
carrying amounts, and measuring the depreciation charges and impairment losses to be recognised in
relation to them. Property, plant and equipment are tangible items that:
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are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes; and
are expected to be used during more than one period.
Property, plant and equipment includes bearer plants related to agricultural activity.
The cost of an item of property, plant and equipment is recognised as an asset if, and only if:
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it is probable that future economic benefits associated with the item will flow to the entity; and
the cost of the item can be measured reliably.
An item of property, plant and equipment is initially measured at its cost. Cost includes:
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its purchase price, including import duties and non-refundable purchase taxes, after deducting
trade discounts and rebates;
any costs directly attributable to bringing the asset to the location and condition necessary for it to
be capable of operating in the manner intended by management; and
the estimated costs of dismantling and removing the item and restoring the site on which it is
located, unless those costs relate to inventories produced during that period.
Standard history
In April 2001 the International Accounting Standards Board (Board) adopted IAS 16 Property, Plant and
Equipment, which had originally been issued by the International Accounting Standards Committee in
December 1993. IAS 16 Property, Plant and Equipment replaced IAS 16 Accounting for Property, Plant
and Equipment (issued in March 1982). IAS 16 that was issued in March 1982 also replaced some parts in
IAS 4 Depreciation Accounting that was approved in November 1975.
In December 2003 the Board issued a revised IAS 16 as part of its initial agenda of technical projects. The
revised Standard also replaced the guidance in three Interpretations (SIC-6 Costs of Modifying Existing
Software, SIC-14 Property, Plant and Equipment—Compensation for the Impairment or Loss of
Items and SIC-23 Property, Plant and Equipment—Major Inspection or Overhaul Costs).
In May 2014 the Board amended IAS 16 to prohibit the use of a revenue-based depreciation method.
In June 2014 the Board amended the scope of IAS 16 to include bearer plants related to agricultural
activity.
In May 2017, when IFRS 17 Insurance Contracts was issued, it amended the subsequent measurement
requirements in IAS 16 by permitting entities to elect to measure owner-occupied properties in specific
circumstances as if they were investment properties measured at fair value through profit or loss applying
IAS 40 Investment Property.
In May 2020, the Board issued Property, Plant and Equipment: Proceeds before Intended
Use (Amendments to IAS 16) which prohibit a company from deducting from the cost of property, plant
and equipment amounts received from selling items produced while the company is preparing the asset
for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or
loss.
Other Standards have made minor consequential amendments to IAS 16. They include IFRS 13 Fair
Value Measurement (issued May 2011), Annual Improvements to IFRSs 2009–2011 Cycle (issued May
2012), Annual Improvements to IFRSs 2010–2012 Cycle (issued December 2013), IFRS 15 Revenue from
Contracts with Customers (issued May 2014), IFRS 16 Leases (issued January 2016) and Amendments to
References to the Conceptual Framework in IFRS Standards (issued March 2018).
Related active projects
Related completed projects
 Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)
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Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16
and IAS 38)
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Classification of Servicing Equipment (Amendments to IAS 16)
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IFRS Taxonomy Update—Amendments to IFRS 17, IFRS 4 and IAS 16
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Lease Term and Useful Life of Leasehold Improvements (IFRS 16 Leases and IAS 16 Property,
Plant and Equipment)
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Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
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Revaluation Method—Proportionate Restatement of Accumulated Depreciation (Amendments to
IAS 16 and IAS 38)
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Stripping Costs in the Production Phase of a Surface Mine
Related IFRS Standards
 IAS 36 Impairment of Assets
Related IFRIC Interpretations
 IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
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IFRIC 18 Transfers of Assets from Customers
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IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
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SIC-32 Intangible Assets—Web Site Costs
Unconsolidated amendments
Implementation support