International Accounting Standard 16 (IAS 16)- Property, Plant and Equipment is amended and effective for annual periods beginning on or after 01 January 2022. Early application is permitted and it shall disclose that fact.
Amendment points are as follows:
- The proceeds from the sale of products produced while the asset is bringing to the location and condition necessary for it to be capable of operating in the manner intended by the management (these products are manufactured for the purpose of testing) will be recognized as income in the profit or loss and costs of those items are measured in accordance with International Accounting Standard 02- Inventories. (Refer to paragraph 20A).
- IAS 16 requires disclosure above incomes and expenses on the Statement of Comprehensive income. (Refer to paragraph 74A)
- 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 the management on or after the beginning of the earliest period presented in the Financial Statements are adjusted retrospectively and the cumulative effect of initially applying the amendments is recognized as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate). (Refer to section 80D)