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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 16 PPE Definition
I have a little bit confusion about PPE definition:
Property, plant and equipment are tangible assets with the following properties.
– Held by an entity for use in the production or supply of goods or services, for RENTAL TO OTHERS, or for administrative purposes
– Expected to be used during more than one period
why the definition includes property used for rental to others, shouldn’t it be dealt within IAS 40?
Hi,
Property held and leased to others under an operating lease would be held as investment property, as it remains on your SFP given you have the risks and rewards of ownership.
If however you are holding and leasing plant or equipment under an operating lease then it isn’t investment property, so we need to account for the item as PPE.
Thanks