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5600/020 Definitions: Eff. From: 01/01/2010 Eff. Until: Topic: Property, Plant & Equipment

This document defines key terms related to property, plant, and equipment accounting policies. It defines assets permanently and temporarily out of use, capital expenditures, capital work in progress, carrying amount, cash generating units, depreciable amount, depreciation, fair value less costs to sell, cost of an asset, economic life, impairment, investment grants, investment property, freehold and leasehold interests, non-current assets held for sale, property, plant and equipment, and qualifying assets. The definitions are provided to clarify terminology used in the company's accounting policy manual.

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54 views2 pages

5600/020 Definitions: Eff. From: 01/01/2010 Eff. Until: Topic: Property, Plant & Equipment

This document defines key terms related to property, plant, and equipment accounting policies. It defines assets permanently and temporarily out of use, capital expenditures, capital work in progress, carrying amount, cash generating units, depreciable amount, depreciation, fair value less costs to sell, cost of an asset, economic life, impairment, investment grants, investment property, freehold and leasehold interests, non-current assets held for sale, property, plant and equipment, and qualifying assets. The definitions are provided to clarify terminology used in the company's accounting policy manual.

Uploaded by

Bilal Shafique
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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5600/020 Definitions Page 1 of 2

CDD Home Accounting Policy Manual 5600/020

5600/020 Definitions
Eff. from: 01/01/2010 Eff. until:
Topic: Property, plant & equipment

Title

Policy 5600 Property, Plant & Equipment

Section 020 Definitions

Details

Defined terms

Assets permanently out of use Assets which are put out of use permanently and either they cannot or they
are not intended to be sold.

Assets temporarily out of use Assets which are put out of use temporarily which are expected to be used
at some point in the future.

Capital expenditure Capital expenditure is expenditure which qualifies to be recognised as an


asset or added to the cost of an asset.

Capital Work In Progress Assets in the course of construction or acquisition.

Carrying amount This is the amount at which an asset is recognised in the balance sheet
after deducting any accumulated depreciation and impairment losses.
Carrying amount is also referred to as Net Book Value.

Cash generating unit (CGU) A cash generating unit is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows
from other assets.

Depreciable amount The depreciable amount is the cost of an asset, or other amount substituted
for cost, less its residual value.

Depreciation Depreciation is the systematic allocation of the depreciable amount of an


asset over its useful life.

Fair value less costs to sell This is the price that would be received to sell an asset or paid to settle a
liability in an orderly transaction between market participants , less the
costs of disposal.

Cost of an asset The cost of an asset is the original purchase cost or cost of production of an
asset. Cost of an asset is also referred to as Gross Book Value.

Economic life Economic life of an asset is the period over which the company can derive
business benefits from an asset.

Impairment These may be goodwill, indefinite-lived intangible assets and finite life
assets.

Investment grants Investment grants are cash grants or subsidies received from the
government (or other such organisations) in connection with capital
expenditure, for the purpose of encouraging capital investment.

Investment property An investment property is one held to earn rentals or for capital
appreciation or both.

Freehold Freehold is when the company owns the right to use an asset.

Leasehold Leasehold is when the company has the right use an asset for a fixed
period of time.

Non-current assets held for Non current assets held for sale are non current assets for which the
sale carrying amount will be recovered through selling the asset rather than
usage in the business.

Property, Plant and Equipment Property, Plant and Equipment are tangible items that: a) are held for use in
(PPE) the production or supply of goods or services, for rental to others, or for
administrative purposes; and b) are expected to be used during more than
one reporting period.

Qualifying asset A qualifying asset, for the capitalisation of borrowing costs, is one that
necessarily takes a substantial period of time to get ready for its intended
use or sale.

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