Accounting 

IASB Issued Amendments to IAS 16 Regarding Proceeds Before Intended Use

On 14 May 2020, the International Accounting Standards Board (IASB) published 'Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)' regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management.

Changes

Amendments to IAS 16 Property, Plant and Equipment — Proceeds before Intended Use amend the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

Effective date and transition

The amendments to IAS 16 are effective for annual periods beginning on or after 1 January 2022. Early application is permitted.

An entity applies the amendments retrospectively only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments.

Sources: www.iasplus.com

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