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

Under the Ind AS 16 paragraph 6 definition, the residual value of an asset is best described as which of the following?

Residual value is the estimated amount an entity would currently obtain from disposing of the asset, after deducting estimated costs of disposal, as if the asset were already of the age and condition expected at the end of its useful life.

  1. AThe estimated amount an entity would currently obtain from disposal, after deducting estimated disposal costs, if the asset were already of the age and condition expected at the end of its useful lifeCorrect
  2. BThe original cost of the asset less accumulated depreciation at the reporting date
  3. CThe present value of future cash flows expected from continued use of the asset
  4. DThe amount at which the asset could be exchanged between knowledgeable willing parties at the reporting date, before disposal costs

Explanation

Residual value is measured on current prices for an asset already at the end-of-life age and condition, net of estimated disposal costs. Option B describes carrying amount. Option C describes value in use. Option D describes fair value without deducting costs.

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