Ind AS 16 Disclosure Requirements for PPE

Understand Disclosure Requirements of Ind AS 16

Key rules to remember

Class-wise disclosures (para 73(a)-(d))

Measurement bases + depreciation methods + useful lives or rates + gross carrying amount and accumulated depreciation (with impairment losses) at start and end

Given for each class of PPE.

Carrying amount

Carrying amount = Gross amount − Accumulated depreciation − Accumulated impairment losses

Definition in para 6.

Reconciliation (para 73(e))

Opening carrying amount + additions − disposals and assets held for sale + business combinations ± revaluation and OCI impairment changes − impairment in P&L + impairment reversals in P&L − depreciation ± exchange differences ± other changes = Closing carrying amount

The standard lists nine items (i) to (ix). Show only those that apply.

Other required disclosures (para 74)

(a) restrictions on title and pledges; (b) construction expenditure; (c) contractual commitments; (d) third-party compensation in profit or loss if not shown separately

Required for the entity as a whole.

Revalued assets (para 77)

Effective date; whether independent valuer involved; cost-model carrying amount for each revalued class; revaluation surplus with change for period and distribution restrictions

Add the Ind AS 113 disclosures.

Encouraged disclosures (para 79)

Idle PPE carrying amount; gross amount of fully depreciated PPE still in use; retired PPE not held for sale; fair value if materially different (cost model)

Encouraged, not mandatory.

How to solve Disclosure Requirements of Ind AS 16 questions

1. 1Identify the classes of PPE in the question and plan to disclose each class separately.
2. 2List the para 73(a)-(d) items: measurement basis, depreciation method, useful life or rate, gross amount and accumulated depreciation.
3. 3Build the reconciliation: start with the opening carrying amount and add or deduct each movement given in the case.
4. 4Check that the closing figure agrees with gross amount less accumulated depreciation and impairment.
5. 5Add para 74 items: pledges, restrictions, construction expenditure, commitments, compensation.
6. 6If any class is revalued, add para 77 items: effective date, valuer, cost-model carrying amount, revaluation surplus movement and distribution restrictions.
7. 7Separate required items from the encouraged ones in para 79, and state which is which.

Quickest way: Four-block recall

Common mistakes in Disclosure Requirements of Ind AS 16

• Giving one combined disclosure for all PPE instead of by class.

  Students focus on the total in the balance sheet.

  Fix: Write 'for each class' and show separate figures for each class.

• Reconciling gross carrying amount only, not carrying amount.

  Gross and net amounts get confused.

  Fix: The reconciliation is of carrying amount, which is after depreciation and impairment. Show depreciation as a deduction.

• Treating para 79 items as mandatory.

  They appear in the same list of disclosures.

  Fix: Para 79 says entities are encouraged to disclose them. Mark them as encouraged.

• Omitting the cost-model carrying amount for revalued classes.

  Students remember only the valuation date and valuer.

  Fix: For each revalued class, disclose what the carrying amount would have been under the cost model.

• Forgetting commitments and pledged assets.

  These are not part of the numerical movement.

  Fix: Always scan the case for security given, title restrictions and contracts to buy PPE, and disclose them under para 74.

Worked examples