Financial accounting is the crucial tool which is used by the organisation in order to assist managers and potential managers in order form reasonable investment and financial decisions. Assessing that financial theories which investment and financing decisions which must be relied upon the cash flow and risk. This report is going to cover the issues which could arise in IFRS exposure draft related to the Property, Plant and Equipment.

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1. Memo:


To: Micheal Johnson

From:Amitabh Bhattacharyya (Senior cost Accountant)XYZ Consultancy firm

Date: 21st April, 2018

Subject: Issues  emerged in IFRS exposure draft and it amendments process

The main issues arise which has emerged in the IFRS exposure draft about the property, plant and Equipment- which proceeds before intended use. In the initial time, this has been observed that the IFRS has interpreted committee which has made in order to emerge an interpretation of the IAS 16 Property, Plant and Equipment in order to deal with it. IFRS interpretations Committee attained a request to clarify the accounting for net proceeds from selling items generated at the time of testing an item of property, plant and equipment as per the construction (Weil, Schipper and Francis, 2013). This has been observed that the interpreted that committee which has been elaborated into two parts. The first part reduce amount of proceeds an organisation reduced form the costs of testing in profit or loss, rather than, as a  reduction from the cost of the PPE to only those proceeds of organisation reducing from the cost of PPE to only those procedures emerge form testing tasks, and elaborate that net proceeds an organisations reduced which must not exceed the cost of testing covered as a portion of the costs of the PPE.

Under this Exposure Draft, International Accounting Standard Board aims to amed IAS 16 which is totally related to the property, plant and equipment. This amendments will restrict to reduce the costs from the item of property, plant and equipment any procedures from the selling products from the cost of an item of the property, plant and equipment which has been proceeds  from selling items emerged while manufacturing that assets to the location and also condition essential for it to be capable of operating in manner deliberate by the management (Bhattacharyya, 2012). Irrespective of an organisation will identify  those sales proceeds in profits and loss.

Paragraph 17 of IAS 16 particularly examples of the costs directly attributable to introducing an item of the property, plant and equipment to the location and condition essential for it. Which is capable of operating in the manner that has been intended by the management in order to test the costing. Paragraph 17 (e) of IAS 16 mentioned that the cost of PPE covers the testing costs form the proceeds form selling of any items generated at the time of introducing assets to that location and condition.

The IFRS  Interpretation Committee attained a request under which two questions were asking about paragraph 17(e) of IAS 16:

a). At the time of proceeds referred to in that paragraph link to the items manufactured from testing; and

b) If an organisation reduces from the cost of a product of time of item of the property, plant and equipment any proceeds which above the cost of testing.

When elaborating the issue, Committee determined concerned questions about the cost of the property, plant and equipment. After exploring diverse approaches, committee suggested that the Board aim an amendment to the IAS 16 to stop the reducing sales proceeds from cost of a goods of property, plant and equipment. Board agreed along with the committee's recommendations.

The main aim of the Board is to invite the comments on the proposals in this Exposure Draft, more specifically fix out hereunder. Comments are highly supportable if they:

a). Statement on the question as mentioned;

b). Point out the particular paragraph(s) to which they concerned;

c). covers clear rationale;

d). Determine any alternative the Board must consider.

e). Covers any alternative Board must

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