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IAS 16―Property, Plant & EquipmentIFRS vs. GAAP
AUDIT
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PP&E/Initial recording
IFRS
•Property, plant and equipment is recognized initially at cost.
•Cost includes all expenditure directly attributable to bringing the asset to the location and working condition for its intended use.
US GAAP
•Like IFRSs, property, plant and equipment is recognized initially at cost.
•Like IFRSs, cost included all expenditure directly attributable to bringing this asset to the location and working condition for its intended use.
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PP&E/Salvage
IFRS
•Cost included the cost of dismantling and removing the asset and restoring the site.
•Changes to an existing decommissioning or restoration obligation generally are added to or deducted from the cost of the related assets and depreciated prospectively over its remaining useful life.
US GAAP
•Like IFRSs, cost included the cost of dismantling and removing the asset and restoring the site.
•Like IFRSs, changes to an existing decommissioning or restoration obligation generally are added to or deducted from the cost of the related asset and depreciated prospectively over its remaining useful life.
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PP&E/Depreciation
IFRS
•Property, plant and equipment is depreciated over its useful life.
•An item of property, plant and equipment is depreciated even if it is idle, but not if it is held for sale.
US GAAP
•Like IFRSs, property, plant and equipment is depreciated over its useful life.
•Like IFRSs, an item of property, plant and equipment is depreciated even if it is idle, but not if it is held for sale.
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PP&E/Decreciation
IFRS
•Estimates of useful life and residual value, and the method of depreciation, are reviewed at least at each annual reporting date. Any changes are accounted for prospectively as a change in estimate.
US GAAP
•Unlike IFRSs, estimates of useful life and residual value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method no longer are appropriate. Like IFRSs, any changes are accounted for prospectively as a change in estimate.
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PP&E/Depreciation & subsequent expenditures
IFRS
•When an item of property, plant and equipment comprises individual components for which different depreciation methods or rates are appropriate, each component is depreciated separately.
•Subsequent expenditure is capitalized only when it is probable that it will give rise to future economic benefits.
US GAAP
•Unlike IFRSs, component accounting is permitted but not required.
•Like IFRSs, subsequent expenditure is capitalized only when it is probable that it will give rise to future economic benefits.
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PP&E/Revaluation
IFRS
•Property, plant and equipment may be revalued to fair value if fair value can be measured reliably. All items in the same class are revalued at the same time and the revaluations are kept up to date.
US GAAP
•Unlike IFRSs, the revaluation of property, plant and equipment is not permitted.
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PP&E/Impairment & recording disposals
IFRS
•Compensation for loss or impairment cannot be offset against the carrying amount of the asset lost or impaired.
•The gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.
US GAAP
•Like IFRSs, compensation for loss or impairment cannot be offset against the carrying amount of the asset lost or impaired.
•Like IFRSs, the gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.
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Other matters
•Regulatory assets and liabilities
•Emission allowances
•Inventories
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Resume
John has 28 years of public accounting experience. He has extensive experience in providing audit and process review services for utility/energy companies. Over the past several years John has served as lead engagement partner for four SEC registrants including two investor owned utilities. John also has significant experience in working with municipal utilities. In addition he has substantial experience in Sarbanes requirements, regulation, IPO’s, registration statements and business combinations and international audits. He has testified in regulatory proceedings before the Kansas Corporation Commission.
Background
John graduated from the University of Missouri in Columbia. He is a licensed CPA, as well as a member of the American Institute of Certified Public Accountants and Missouri and Kansas Certified Public Accountants societies. John is a past Advisory Board member for the University of Missouri School of Accounting and is a presenter at various energy and utility industry conferences.
John is currently a board member for the Children’s Center for the Visually Impaired.
John F. LathropPartner
1000 Walnut Street, Suite 1000Kansas City, Missouri [email protected]
