Meaning of Property Plant & Equipment - Ind AS - Indian Accounting Standards - Companies Law

Meaning of Property Plant Equipment Property Plant equipment are tangible items that: are held for USE in the production or supply of goods or services, for RENTAL to others (other than land building), or for ADMINISTRATIVE purposes; and are expected to be used during MORE THAN ONE PERIOD. A bearer plant is a LIVING PLANT (E.g., Banana tree) that: is USED in the production or supply of AGRICULTURAL PRODUCE; is expected to bear produce for MORE THAN ONE PERIOD; and has a REMOTE LIKELIHOOD of being SOLD AS AGRICULTURAL PRODUCE {except for incidental scrap sales}. Cost of Property, Plant Equipment: Cost of PPE shall be recognised as an asset if, and only if both conditions are met: future economic benefits; and COST can be measured reliably. Note:- Treatment of Land Building In case property is held for use in production or supply of Goods or Services or Administrative purposes then treat it as owner occupied property (PPE) as per IndAS 16. In case property is held for Rental to others or Capital Appreciation or Undetermined use then treat such property as per Ind AS 40 (Investment Property). Example Business of giving building on rent is PPE as Ind AS 16 for such business, whereas if business is of selling scientific instruments than renting of building is Investment Property as per Ind AS 40. Treatment of spare parts (bearings, screws etc.) and stand-up equipment (Fire Extinguishers) If it meets definition of PPE than apply Ind AS 16 otherwise treat it as Inventory as per Ind As 2.