Implemenation of IAS 16 «Property, plant and equipment» in activity of entities of public interest
DOI:
https://doi.org/10.31548/bioeconomy2019.01.052Abstract
Improvement of accounting and financial reporting system is carried out in Ukraine in accordance with the requirements of international standards and legislation of the European Union. There are certain differences in the contents of AP(S) 7 «Fixed assets» and IAS 16 «Property, plant and equipment» regarding criteria of recognition of the asset as a fixed asset; its classification, assessment and reassessment; depreciation methods etc.
According to recognition of the asset in international practice there is a probability that future economic benefits will come directly to the entity and professional judgment should be applied during determination of the unit of object in each case.
Classification of fixed assets includes separate classes of vehicles (ships, planes and cars) and tools, instruments and implements (furniture, supplies and office equipment).
Determined types of value of fixed assets: current (recoverable), book value and sales price. There is no residual, net realizable value of a non-current asset.
Reassessment of property, plant and equipment occurs when the residual value of an object substantially differs from its fair value.
The use of the following three methods of depreciation of fixed assets is regulated: straight-line (corresponds to the straight-line method according to AP(S) 7); decrease in residual value (analogue - decrease in residual value); sums of units of production (analog of the manufacturing method). Such two methods of depreciation as cumulative and accelerated reductions in residual values are absent, but other depreciation methods are available and not limited in usage.
According to IAS 16, an entity should choose one of two accounting models in accounting policy:
the cost model – according to which an object is assessed at residual value (historical cost minus accumulated depreciation and minus accumulated impairment losses);
the reassessment model - the assessment is done at fair value at the date of reassessment minus accumulated depreciation and accumulated impairment losses.
When comparing fixed assets according to national and international standards, one can conclude that there are some differences in assessment, reassessment, recognition of initial cost, depreciation and disposal. The International Accounting Standard has a general advisory nature and does not take into account the national peculiarities of accounting in Ukraine. Implementation of IAS 16 «Property, plant and equipment» by entities of public interest in Ukraine will allow to switch into international accounting practice.
References
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Lozotska К.S., Kaliuha E.V. «Comparative characteristics of depreciation according to AP(S) 7 and IAS 16. Collection of materials of 72th scientific and practical student conference: «Conceptual principles of balanced development of the agrarian sector of the Ukrainian economy», 21.11.2018, NULES. Kyiv, abstracts - P.183-186
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