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IAS 16 – Major Overhaul

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 16 – Major Overhaul

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by Stephen Widberg.
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  • June 4, 2021 at 4:30 am #623032
    Anonymous
    Inactive
    • Topics: 1
    • Replies: 0
    • ☆

    As per IAS 16 when an asset has to undergo a major overhaul, a company may estimate it based on cost as if it had been purchased at the time of purchase.

    So when I have a ‘planned’ Major Replacement occurring every x years , I de-recognize the replaced part at WDV and capitalize the new part.

    But is there a separate treatment for ‘unplanned’ major replacements? and if so why does the treatment differ in its logic?

    June 4, 2021 at 9:37 am #623084
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    I would have thought that the accounting treatment for an unplanned replacement would be identical to a planned replacement.

    Any difference between WDV and proceeds would of course go to P&L.

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