(BQ) Part 2 book "Financial accounting and reporting" has contents: Earnings per share, corporate governance, environmental and social reporting, ethics for accountants, trend analysis and multivariate analysis, an introduction to Financial Reporting on the Internet,.and other contents. | Introduction In this chapter we consider properly, plane and equipment (PPK). It is helpful to consider the importance of PPE relative to intangible assets, inventory and receivables. This will, of course, vary with the nature of the industry as shown if we consider the pharmaceutical and brewing industries. The relative importance of the different categories of asset within the two industries based on average industry profile has been compiled from IPA UK Industrial Performance Analysis 1996/97 (ICC Business Publications Ltd 1996 - ISSN 0262 3684) based on S3 pharmaceutical manufacturers and developers and 55 brewers and appears in Figure . For PPK the accounting treatment is based on the accruals or matching concepts, under which expenditure is capitalised until it is charged as depreciation against revenue in the periods in which benefit is gained from its use. Thus, if an item is purchased that has an economic life of two years, so that it will be used over two accounting periods to help earn profit for the entity, then the cost of that asset should be apportioned in some way between the two accounting periods. Figure Ratio of assets to total assets for 1994/95 f o r 83 pharmaceutical manufacturers and developers and 55 brewers 400 • Balance sheet - equity, liability and asset measurement and disclosure However, this docs not take into account the problems surrounding PPK accounting and depreciation, which ha\e so far given rise to six. relevant international accounting standards. We will consider these problems in this chapter covering: IAS 16 and IAS 23: • What is P P E (IAS 16)? • 1 low is the cost of PPE determined (IAS 16 and IAS 2$)r • I low is depreciation of PPF. computed (IAS 16): • \\ hat are the regulations regarding carrying PPK at revalued amounts (IAS 16): O t h e r relevant international accounting standards and pronouncements: • I low should grants receivable towards the purchase of PPK IK dealt with (IAS 20): • Are there .
