[Verse 1] When you acquire a tangible asset for your company's use More than one year of service, here's the recognition clues Probable future benefits must flow into your hands And you can measure cost reliably, that's where IAS sixteen stands Land and buildings, equipment too, infrastructure in your sight Recognize when control transfers and the price is set just right [Chorus] Cost or revaluation, pick your measurement way Componentize the parts that have different lives each day Depreciate systematically over useful years Straight line, units, diminishing, choose the method that appears Most faithful to consumption, IAS sixteen is clear Property, plant, equipment rules we hold so dear [Verse 2] Initial measurement starts with purchase price you pay Add the costs to bring it to location where it'll stay Installation, testing, professional fees belong Subtract trade discounts, this is how you get cost strong Subsequent costs are capitalized when they enhance Otherwise expense them, don't give them a second glance [Chorus] Cost or revaluation, pick your measurement way Componentize the parts that have different lives each day Depreciate systematically over useful years Straight line, units, diminishing, choose the method that appears Most faithful to consumption, IAS sixteen is clear Property, plant, equipment rules we hold so dear [Bridge] Break it down to components when they're significant in cost Engine, frame, and tires, track each part that can be lost Revaluation model means fair value at each date With increases going to equity, decreases calculate If reserves exist use those first, then hit the income statement Derecognize when disposed or no future benefit [Verse 3] Review useful life and residual each reporting year Methods too might need changing as the estimates become clear When you sell or scrap the asset, remove it from your books Gain or loss goes to profit, that's how the standard looks No more depreciation once it's classified held for sale IAS sixteen guides you through each detailed trail [Outro] From recognition to disposal, every step along the way IAS sixteen shows you how to properly display Your property, plant, equipment in the books you keep These accounting principles run strong and deep
← Inventory Accounting - IAS 2 | Intangible Assets - IAS 38 →