Recognition and Evaluation of Fixed Assets at Public Interest Enterprises

Abstract

Due to the lack of clear and unambiguous recommendations regarding the recognition and measurement of property, plant and equipment, public interest entities have to rely on professional judgment, but entities make many mistakes in the process of recognition and measurement of property, plant and equipment, they do not indicate in which cases and on what principles it is necessary application of professional judgment. The purpose of the article is to study the procedure for recognition and measurement of property, plant and equipment of public interest entities that apply international financial reporting standards, with the determination of situations when professional judgment must be applied. The work considers the criteria for recognition of property, plant and equipment, it is clarified that when determining the cost criterion, it is necessary to base it on the type of activity and technological processes. The measurement of initial costs for the acquisition or creation of an object of property, plant and equipment was studied, in particular the components of the cost of property, plant and equipment – acquisition costs, directly attributable costs, decommissioning costs. The costs that are not included in the cost of the property, plant and equipment and are written off to the expenses of the period are considered. Further expenses related to the already recognized object of the property, plant and equipment are considered. The models of measurement of property, plant and equipment after their recognition were investigated – the cost model and the revaluation model, the methods of revaluation of property, plant and equipment were investigated – the index method and the collapse method. The procedure for recognizing and determining the amount of impairment losses has been studied, taking into account that the amount of the expected recovery of the asset is the greater of the two valuations of the asset: fair value minus disposal costs and its value in use. Considered the procedure for derecognition of property, plant and equipment after disposal, when future economic benefits from its use are no longer expected, after reclassification into an asset held for sale.