Impairment & derecognition of PPE - Ind AS - Indian Accounting Standards - Companies Law

Impairment derecognition of PPE Impairment of PPE - To determine whether an item of property, plant and equipment is impaired, an entity applies Ind AS 36, Impairment of Assets . That Standard explains how an entity reviews the carrying amount of its assets, how it determines the recoverable amount of an asset, and when it recognises, or reverses the recognition of, an impairment loss. Compensation for impairment - Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up shall be included in profit or loss when the compensation becomes receivable. Impairments or losses of items of property, plant and equipment, related claims for or payments of compensation from third parties and any subsequent purchase or construction of replacement assets are separate economic events and are accounted for separately as follows: impairments of items of property, plant and equipment are recognised in accordance with Ind AS 36; derecognition of items of property, plant and equipment retired or disposed of is determined in accordance with this Standard; compensation from third parties for items of property, plant and equipment that were impaired, lost or given up is included in determining profit or loss when it becomes receivable; and the cost of items of property, plant and equipment restored, purchased or constructed as replacements is determined in accordance with this Standard. Derecognition of PPE In determining the date of disposal of an item, an entity applies to the criteria in Ind AS 115 for recognizing revenue from the sale of goods. Ind As 11+ applies to disposal by a sale and leaseback. If entity follows Cost Model Profit Loss on disposal should be treansferred to P L A/c. Revaluation Model revaluation Surplus exist Profit/Loss on disposal should be transferred to P L. After disposal, if any revaluation surplus exist Transfer to retained earnings. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be included in profit or loss when the item is derecognised (unless Ind AS 116, Leases, requires otherwise on a sale and leaseback). Gains shall not be classified as revenue. However, an entity that, in the course of its ordinary activities, routinely sells items of property, plant and equipment that it has held for rental to others shall transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale. The proceeds from the sale of such assets shall be recognised as revenue in accordance with Ind AS 115, Revenue from Contracts with Customers. Ind AS 105 does not apply when assets that are held for sale in the ordinary course of business are transferred to inventories. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. After disposal of a PPE, it should be compleltely eliminated from financial statements. The amount of consideration is Transaction Price as per Ind AS 115. If there are any changes to the transaction price, will be dealt with the same standard.