Question

What do we mean with the term “tangible assets”? How can we measure them according to IFRS?  

Answer 1

Assets that are physical and measurable and that are used in company's operations are Tangible Assets.Property,Plant and Equipment are tangible assets.

As per IFRS , IAS 16 requires that Property,Plant and Equipment should initially be measured at cost.

The cost comprises of

(i) the cost of purchase,net of any trade discounts plus any import duties and non-refundable taxes.

(ii) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management such as amount paid for installation or initial testing of the asset, professional fees associated with installation etc.

(iii) Initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located,the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

The entity shall choose either cost model or revaluation model as its accounting policy and shall apply that policy to an entire class of property, plant and equipment