IAS 16 and componentisation

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. What is the rationale behind componentisation of property,plant and equipment?

  2. What factors determine the identification of the component parts of PPE?

  3. What is the minimum requirement for the number of parts of an asset that should be identified?

  4. Why did the IASB modified IAS 16 to require the allocation of components to PPE?

  5. Which accounting principle is used primarily for determining the component parts of PPE?

  6. What is the meaning of ‘significant component’ in the context of PPE?

  7. When a component is replaced, what are the accounting entries in the financial records?

  8. The general rule is that there should be retrospective application of IAS 16 and componentisation. Is it possible to apply componentisation prospectively at the date of transition to IFRS?

  9. Is component accounting relevant to Investment Property as there is no requirement to depreciate Investment Property?

  10. Which of the following assets should also use componentisation where applicable?