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

Which statement correctly describes the difference between Ind AS 16 and IAS 16 regarding sale proceeds of items produced while bringing an asset to its intended condition?

Ind AS 16 has not adopted the May 2020 IAS 16 amendment. Instead, paragraph 17(e) clarifies that the excess of net sale proceeds of items produced over the cost of testing is deducted from directly attributable costs of the asset, not recognised in profit or loss.

  1. AInd AS 16 adopts the IAS 16 amendment and recognises all such proceeds in profit or loss
  2. BInd AS 16 has not made the IAS 16 amendment, but clarifies that the excess of net proceeds over testing cost is deducted from directly attributable costsCorrect
  3. CInd AS 16 requires such proceeds to be credited to a capital reserve
  4. DInd AS 16 requires all such proceeds to be deducted from cost, without adjusting for testing cost

Explanation

The IASB's May 2020 amendment prohibits deducting such proceeds from cost. Ind AS 16 has not adopted it, but para 17(e) was amended so that the excess of net sale proceeds over the cost of testing is not recognised in profit or loss but deducted from directly attributable costs. Option A describes IAS 16, not Ind AS 16.

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