AS 10: Property, Plant and Equipment
AS 10 (Revised) prescribes the accounting for property, plant and equipment: recognition of the asset, determination of its carrying amount, depreciation and derecognition.
- Standard
- AS 10
- Models
- Cost / Reval
- Depreciation
- Systematic
- Tested at
- Inter (core)
Applicability
Applies to all tangible fixed assets except biological assets related to agricultural activity and wasting assets like mineral rights and expenditure on exploration of non-regenerative resources.
Key points to remember
- Initial measurement at cost: purchase price plus directly attributable costs plus initial estimate of dismantling/restoration obligations.
- Subsequent measurement: cost model or revaluation model, applied to an entire class of PPE.
- Depreciation is allocated systematically over useful life; residual value and useful life are reviewed at least at each year end.
- Component accounting: parts with significant cost and different useful lives are depreciated separately.
- On revaluation, the increase goes to revaluation surplus; a decrease goes to P&L except to the extent it reverses a previous surplus.
How the exam tests it
Practical questions on cost capitalisation, exchange of assets, revaluation and component depreciation are frequent in Intermediate Advanced Accounting; concept MCQs appear at Foundation.
Related standards
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Talk to usWhat is included in the cost of PPE under AS 10?
Purchase price (after trade discounts, including duties and non-refundable taxes), directly attributable costs of bringing the asset to its working condition and location, and the initial estimate of dismantling, removal and site-restoration costs.
What is component accounting?
Where parts of an asset have a cost that is significant relative to the whole and different useful lives — e.g., an aircraft engine versus its airframe — each significant component must be depreciated separately.
Can an enterprise revalue only one machine out of a class?
No. If the revaluation model is chosen, it must be applied to the entire class of property, plant and equipment to which the asset belongs, to avoid selective revaluation.