Skip to content

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

Under Ind AS 16, which of the following tangible items meets the definition of property, plant and equipment?

A machine held for production use over several years is property, plant and equipment. It is tangible, held for production, rental or administrative use, and expected to be used for more than one period. Items held for resale or consumed within one period do not qualify.

  1. AA machine held by a manufacturer for use in production over several yearsCorrect
  2. BFinished goods held by a dealer for sale in the ordinary course of business
  3. CA spare part consumed entirely within the current reporting period
  4. DA vehicle bought by a trader solely for resale within a few weeks

Explanation

The definition requires a tangible item held for use in 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. Only the production machine meets both conditions. Items for resale or consumed within one period fail the more-than-one-period test or the purpose test.

Did you get it right without looking?

One question tells you little. A timed set on Property, Plant and Equipment (Ind AS 16) shows your real accuracy, how long you take and where you lose marks.

Practise Property, Plant and Equipment (Ind AS 16)Free diagnostic mock

More Property, Plant and Equipment (Ind AS 16) questions