10.5 Presentation and Disclosure Requirements

IAS 16 details a number of required disclosures for property, plant, and equipment assets. Some of these disclosures are as follows:

• The measurement bases used
• Depreciation methods used
• Useful life or depreciation rates used
• A reconciliation of the gross carrying amount and accumulated depreciation at the beginning of the period to the amount at the end of the period, including
  • details of revaluations and impairment losses, including an indication of whether an independent appraiser was used;
  • details of additions and disposals, including assets held for sale;
  • the depreciation charged during the year; and
  • the effect on PPE of exchange rate differences
• Restrictions on the use of the assets pledged as security for liabilities
• Commitments to purchase assets
• Any compensation received from third parties when assets are impaired or abandoned
• Details of the effects of changes in estimates.

The scope and scale of these disclosure requirements reflect the fact that property, plant, and equipment assets are often a significant portion of a company’s total asset base. As well, they reflect the variety of different methods and estimates required in accounting for PPE assets. The significant disclosures should help readers better understand how a company uses its assets to generate returns.