6 IFRS in accounting for non-current assets

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Here are 6 IFRS that you need to consider in accounting for long-term assets:
#1 IAS 16 Property, Plant and Equipment
If you hold your assets with the purpose of using them in the production of goods or providing services, for rentals to others or administrative purposes, then yes, this one can be the right choice.

#2 IAS 38 Intangible Assets
Where you apply IAS 16 to tangibles, you should apply IAS 38 to intangibles like software or licenses.

#3 IAS 40 Investment Property
IAS 40 is often an omitted standard, but you should apply it to all your buildings or lands held to earn rentals.

Moreover, if you hold your buildings or land for capital appreciation purposes (i.e. making profit from their fair value changes), then you need to apply IAS 40 rather than IAS 16.

#4 IAS 2 Inventories
This should be no surprise for a seasoned CFO: when you hold some long-term assets in order to sell them in an ordinary course of your business, then they are inventories rather than property, plant and equipment.

For example, car dealers report new cars for resale under “inventories”, and cars for their own use usually under “property, plant and equipment”.

#5 IAS 41 Agriculture
I’m mentioning this one just to give you the full picture, but here again, think of IAS 41 for all your biological assets used in an agricultural activity (with the new exception of bearer plants).

#6 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 5 is here for a very special occasion: as soon as specified conditions are met (i.e. management is committed to a sale, an asset is immediately available for sale, etc.), then you need to focus on IFRS 5.

#IFRS #ifrsaccounting #ias16 #shorts