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Questions and Answers
What is the objective of Ind AS 16?
What is the objective of Ind AS 16?
What is excluded from the scope of Ind AS 16?
What is excluded from the scope of Ind AS 16?
When does Ind AS 16 not apply to the produce on bearer plants?
When does Ind AS 16 not apply to the produce on bearer plants?
Which Standard covers the biological assets related to agricultural activity?
Which Standard covers the biological assets related to agricultural activity?
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In what circumstances does Ind AS 16 not apply to property, plant, and equipment?
In what circumstances does Ind AS 16 not apply to property, plant, and equipment?
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What is the fundamental problem in financial reporting addressed by Ind AS 16?
What is the fundamental problem in financial reporting addressed by Ind AS 16?
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Study Notes
Objective of Ind AS 16
- Establishes principles for recognizing, measuring, and disclosing property, plant, and equipment (PPE) in financial statements.
- Aims to enhance comparability and transparency of financial reporting regarding tangible assets.
Exclusions from the Scope of Ind AS 16
- Does not apply to biological assets related to agricultural activity, which fall under a different standard.
- Special rules for investment property are covered under Ind AS 40, excluding that from Ind AS 16’s provisions.
- Exploration and evaluation of mineral resources are governed by Ind AS 106, omitting those from Ind AS 16's scope.
Application of Ind AS 16 to Bearer Plants
- Ind AS 16 does not apply when the produce on bearer plants is grown; effects related to harvesting and selling of produce are outside its purview.
Standard for Biological Assets
- Ind AS 41 covers biological assets related to agricultural activity, outlining recognition and measurement principles specific to these assets.
Circumstances for Non-Application of Ind AS 16
- Ind AS 16 is not applicable to:
- Assets held for sale in the ordinary course of business.
- Certain assets covered under other standards, such as investment properties or mineral resources.
Fundamental Problem Addressed by Ind AS 16
- Aims to rectify inconsistencies and inaccuracies in financial reporting related to the treatment of property, plant, and equipment.
- Enhances the relevance and reliability of the information presented concerning tangible fixed assets.
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Description
This quiz covers the objective and accounting treatment for property, plant, and equipment as per Ind AS 16. It addresses the challenge in accounting for expenditures that contribute to future periods and aims to provide clear information to users of financial statements.
