Dear Chris
I wonder why we have choice when we measure ppe ? In what situations it is recommended to measure PPE at cost model and in what situations it is recommened to measure PPE at revaluation model ?
Ask the Tutor ACCA FR
cost model vs revaluation model-ppe measurement
Hi,
The choice is to allow the accounts to faithfully represent the assets in the financial statements by giving more relevant information. PPE will be held under the revaluation model when it comes to land and buildings as these are likely to appreciate in value. All other items of PPE will be held at cost given that they will not likely be appreciating in value over their life.
Thanks
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