Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) [Completed]
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Effective date: |
The amendments published today are effective for annual periods beginning on or after January 1, 2022. Early application is permitted. An entity applies the amendments retrospectively only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. |
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Last updated: |
September 2020 |
Overview
The purpose of this project is to clarify the accounting for the net proceeds from selling any items produced while bringing an item of property, plant and equipment (PPE) into use.
The Interpretations Committee received a request to clarify the accounting for the net proceeds from selling any items produced while bringing an item of PPE to the location and condition necessary for it to be capable of operating in the manner intended by management. The submitter has asked whether the amount by which the net proceeds received exceed the costs of testing should be recognized in profit or loss or as a deduction from the cost of the PPE.
The Interpretations Committee added this item to its agenda and, after analysis of the issue, recommended that the Board propose a narrow-scope amendment to IAS 16 to prohibit the deduction of proceeds from selling items produced before an item of PPE is available for use from the cost of that PPE.
In May 2020, the International Accounting Standards Board (Board) issued Property, Plant and Equipment—Proceeds before Intended Use, which made amendments to IAS 16 Property, Plant and Equipment. The amendments 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 recognize such sales proceeds and related cost in profit or loss.
Other developments
September 2020
On September 1, 2020, the AcSB endorsed the IASB’s narrow-scope amendments to IFRS Standards, which are now in Part I of the CPA Canada Handbook – Accounting, effective for annual reporting periods beginning on or after January 1, 2022.
May 2020
On May 14, 2020, the IASB published Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management.
March 2020
On March 27, 2020, the IASB staff updated the work plan to indicate that the Board expects to issue the IFRS Amendments in May 2020.
January 2020
On January 31, 2020, the IASB staff updated the work plan to indicate that the IASB expects to issue the Amendments to IAS 16 in March 2020.
July 2019
On July 29, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue the amendments to IAS 16 in Q1/2020.
December 2017
On December 18, 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue the final IFRS Amendment (no date specified).
September 2017
On September 22, 2017, the IASB staff updated the work plan to indicate that the IASB expects to review the Exposure Draft Feedback in December 2017.
July 2017
On July 13, 2017, the AcSB issued an Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Stakeholders are encouraged to submit their comments by October 19, 2017.
June 2017
In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to discuss the Exposure Draft feedback in Q4/2017.
On June 20, 2017, the IASB issued an Exposure Draft on proposed narrow‑scope amendments to IAS 16, Property, Plant and Equipment to reduce the diversity in the application of the Standard.
April 2017
On April 28, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to issue an Exposure Draft in respect of this project for public comment in June 2017.
March 2017
On March 23, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to publish an Exposure Draft in respect of this project for comment by September 2017.
December 2016
On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment by June 2017.
November 2016
On November 18, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to issue an Exposure Draft before May 31, 2017.
October 2016
On October 20, 2016, the IASB staff added this new project to the Board’s Work Plan.