International Accounting Standards Board (IASB) issues amendments to IAS 16 regarding proceeds before intended use

International Accounting Standards Board (IASB) issues amendments to IAS 16 regarding proceeds before intended use

• 11 June 2020
• Accounting
• South African Accounting Academy

In May 2020, the International Accounting Standards Board (Board) issued Property, Plant and Equipment—Proceeds before Intended Use, which made amendments to IAS 16 Property, Plant and Equipment.

This amends 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, a company will recognise such sales proceeds and related cost in profit or loss.

The amendments published today 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.

Click here to download the IFRS amendment.

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