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CMA Intermediate · Financial Accounting · Property, Plant and Equipment (AS 10)

Under AS 10, an item of property, plant and equipment that qualifies for recognition as an asset is initially measured at which amount?

An item of property, plant and equipment that qualifies for recognition is initially measured at its cost. Cost means the cash or cash equivalents paid, or the fair value of other consideration given, to acquire or construct the asset. Fair value or realisable value is not the initial basis.

  1. AIts costCorrect
  2. BIts fair value at the balance sheet date
  3. CIts expected net realisable value
  4. DIts written down value after the first year's depreciation

Explanation

The text of AS 10 states that an item of PPE that qualifies for recognition as an asset should be measured at its cost. Fair value, net realisable value or a depreciated amount is not the initial measurement basis.

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