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IAS 16 — Clarification on classification of servicing equipment as inventory or property, plant, and equipment

Date recorded:

The Committee considered a request for improvement of IAS 16 Property, Plant and Equipment with respect to servicing equipment and classification as property, plant and equipment (PP&E) or inventory. The constituent referring the issue to the IASB had observed that of IAS 16.8 is unclear with respect to the classification of servicing equipment as PP&E or inventory. The confusion arises from a perceived contradiction in the way servicing equipment is addressed in the paragraph.

After a short debate, the Committee agreed to propose an Annual Improvement amendment to IAS 16.8 to state that 'major spare parts, stand-by equipment and servicing equipment' qualify as PP&E when they are expected to be used during more than one annual period. The amendment will also propose deleting the last sentence of the same paragraph.

Related Topics

Correction list for hyphenation

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