Pass Your SBR ACCA Exams with Tom Clendon
Jul 3, 2026 · 36 min · 12 segments
You may think you already know PPE in IAS 16, but this one still causes problems in SBR when it is tested in an applied way. In this episode, I take you through IAS 16 Property, Plant and Equipment…
Tom ClendonHostZakiraGuestSo Tom, as always, let's get down to the very basics, right? What is meant by PPE?
They're a tangible asset, so something physical that has been acquired by the business for use within the business, not for resale, but for use within the business, and is expected to have a life of more than one accounting period.
So cars, factories, buildings, machines, fixtures, plant, equipment, those sorts of things.
And Tom, can you talk me through the initial recognition, please?
Yeah, I mean, you normally buy these things, so it's about wh- wh- what it cost you.
But you can include the costs of installation, the costs of bringing the asset to its present location and condition.
And as we'll see later, there's also going to be the capitalization, in other words, the inclusion of the cost of decommissioning, uh, and in some limited circumstances, finance cost, interest.
And what about the subsequent measurement? I mean, in other words, what exactly is depreciation?
The subsequent measurement of it is it should go down every year, not because the value's going down, but because we are consuming it, because there needs to be the depreciation.
There needs to be a reflection of the fact that the asset has a limited life, and that we should have a systematic way of allocating the cost of the asset to the profit and loss account over the accounting period it's expected to benefit.
It's a matching process systematically writing off the asset over its useful life.
Okay, Tom, for those of our listeners that like a good journal, what's the double entry for depreciation?
One transaction has two effects, and if you are writing off PPE, if you are depreciating PPE, then it's an expense, and that is a debit.
But simultaneously, you're reflecting the consumption and the write-down of the asset, and therefore, that's the credit.
So Tom, as always, let's get down to the very basics, right? What is meant by PPE?
They're a tangible asset, so something physical that has been acquired by the business for use within the business, not for resale, but for use within the business, and is expected to have a life of more than one accounting period.
So cars, factories, buildings, machines, fixtures, plant, equipment, those sorts of things.
And Tom, can you talk me through the initial recognition, please?
Yeah, I mean, you normally buy these things, so it's about wh- wh- what it cost you.
But you can include the costs of installation, the costs of bringing the asset to its present location and condition.
And as we'll see later, there's also going to be the capitalization, in other words, the inclusion of the cost of decommissioning, uh, and in some limited circumstances, finance cost, interest.
And what about the subsequent measurement? I mean, in other words, what exactly is depreciation?
The subsequent measurement of it is it should go down every year, not because the value's going down, but because we are consuming it, because there needs to be the depreciation.
There needs to be a reflection of the fact that the asset has a limited life, and that we should have a systematic way of allocating the cost of the asset to the profit and loss account over the accounting period it's expected to benefit.
It's a matching process systematically writing off the asset over its useful life.
Okay, Tom, for those of our listeners that like a good journal, what's the double entry for depreciation?
One transaction has two effects, and if you are writing off PPE, if you are depreciating PPE, then it's an expense, and that is a debit.
But simultaneously, you're reflecting the consumption and the write-down of the asset, and therefore, that's the credit.
The rest of this transcript — segmented and speaker-labeled, so you land on the exact moment something was said
Search every transcript — by keyword, by phrase, or by meaning, across every show Radar indexes
Trends — what is surging across podcasts, measured against its own baseline
Alerts — when a name you follow appears in a newly indexed episode
No account is needed to search Radar.
