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CA Final · Financial Reporting · Ind AS 16 Property, Plant and Equipment

Sahyadri Textiles Ltd holds the following items at its Pune plant: (i) a stand-by generator used only for the factory over several years, (ii) a stock of spare cloth rolls sold to customers within weeks, (iii) an office photocopier used for administration for many years, (iv) a delivery van given on rent to a transport firm for 5 years. Applying the definition of property, plant and equipment in Ind AS 16, which of the items is NOT PPE?

The stock of cloth rolls is not property, plant and equipment because it is expected to be sold within weeks, not used over more than one period. The generator, photocopier and rented van are tangible, held for permitted purposes including rental to others, and used over multiple periods.

  1. AStand-by generator used for the factory
  2. BOffice photocopier used for administration
  3. CDelivery van given on rent to a transport firm
  4. DStock of cloth rolls held for sale within weeksCorrect

Explanation

PPE comprises tangible items held for production or supply of goods or services, for rental to others, or for administrative purposes, and expected to be used during more than one period. The generator, photocopier and rented van all meet this. The cloth rolls are sold within weeks, so they are not used over more than one period and are inventory. The rented van is not excluded merely because it is rented out, since rental to others is within the definition.

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