United States

Proposed narrow amendments to IAS 16


International Accounting Standard (IAS) 16, Property, Plant and Equipment, currently states that the cost of an item of property, plant and equipment should include the costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Recently, the International Accounting Standards Board proposed narrow-scope amendments to IAS 16 that would prohibit deducting such net proceeds from the cost of an item of property, plant and equipment while that asset is being made available for use. Instead, the entity would recognize the sales proceeds and related costs in profit or loss in accordance with applicable standards.

The Exposure Draft, Property, Plant and Equipment – Proceeds before Intended Use, is available for comment until October 19, 2017.