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CMA Final · Corporate Financial Reporting · Property, Plant and Equipment (Ind AS 16)

Sagar Textiles Ltd runs a spinning unit. Which of the following items, held by the company, meets the definition of property, plant and equipment under Ind AS 16?

A tangible machine held for production and expected to be used for several years is property, plant and equipment, because Ind AS 16 requires a tangible item held for use in production, rental or administration and expected to be used over more than one period.

  1. AA tangible machine held for production and expected to be used over several yearsCorrect
  2. BA tangible spare consumed fully within the current accounting period
  3. CStock of finished yarn held for sale in the ordinary course
  4. DA patent acquired to protect a spinning process

Explanation

Ind AS 16 defines PPE as tangible items held for production or supply of goods or services, rental or administrative purposes and expected to be used during more than one period. The machine satisfies both conditions. Yarn stock is inventory, the patent is intangible, and an item consumed within one period fails the more-than-one-period test.

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