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What are the international strenghts and weaknesses of IAS 16, and how can IAS 16 be improved?


I am writing a dissertation and I have to state the different views of positive and negative critique on IAS 16 as well as how to improve the standard.

asked Nov 5 in IAS 16 - Property, Plant and Equipment by Natasha

1 Answer

+1 vote
The IAS 16 refers to Property, Plant, and Equipment. This accounting standard clearly explains all the pros and cons related to fixed assets. The major strengths of IAS 16 are;
Strengths:
It determines the price of fixed assets and also inherits the depreciation value which shows the actual market value of the asset in context with the lifetime.
Another positive impact of IAS 16 is the revaluation model under which price of the fixed asset is determined every year with the passage of time to be able to know the exact worth of the fixed asset. It shows the amortization method of fixed assets in case of increase in value
Weakness:
It carries the inability to treat the cost of the new facility or producing a new product as being capitalized.
The IAS 16 is not feasible for producing bearer plants plus it also does not apply to develop or maintain the last three categories of assets
answered Nov 6 by Finance Professional Level 2 Member (3,680 points)


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