ACCA SBR ^UK Syllabus C. Reporting The Financial Performance Of A Range Of Entities - Property, plant and equipment and borrowing costs - Notes ^{7 / 24}

Property, plant and equipment and borrowing costs

The most important difference in regard to PPE is that there is no UK equivalent to IFRS 5.

FRS 102 does not provide guidance on non-current assets held for sale, although, as mentioned earlier it does address discontinued operations, requiring disclosure in a separate columnin the profit and loss account (income statement).

The differences are as follows:

IFRS	FRS 102 Section 17
A plan to dispose of an asset before the previously expected date should be recognised in accordance with IFRS 5 which deals with non-current assets held for sale and would require the asset to be valued at the lower of carrying amount and fair value less costs to sell.	FRS 102 would identify this as an indicator of impairment which would trigger the calculation of the asset's recoverable amount for the purpose of determining whether the asset is impaired.
Under IFRS 5, a non-current asset held for sale would no longer be depreciated.	FRS 102 requires the classification and measurement of the asset to continue as normal without regard to the disposal.
Under IAS 16 the residual value, depreciation method and the useful life of an asset should be reviewed at least at each financial year-end.	FRS 102 states that a review is only necessary where there are indicators that a change has occurred.
Under IAS 23, borrowing costs must be included as part of the directly attributable costs of a qualifying asset.	FRS 102 permits a choice of capitalisation or recognising the amounts as part of profit or loss for the period. Where an entity adopts a policy of capitalisation of borrowing costs, it should be applied consistently to a class of qualifying assets.
No specific guidance in IAS 23 is provided on what constitutes 'expenditure on the asset' for the purpose of applying a capitalisation rate to the expenditure on the assets for determining the amount of borrowing cost eligible for capitalisation.	FRS 102 states that 'expenditure on the asset' is the average carrying amount of the asset during the period, including borrowing costs previously capitalised.
IAS 36 provides detailed guidance on some areas where FRS 102 is silent, and IAS 36 has more extensive disclosure requirements.	Less guidance is provided on the measurement of fair value less costs to sell. Where future cash flows are estimated using financial budgets or forecasts (covering a maximum of five years unless there is justification for a longer period), extrapolation techniques should be used. Reversals of impairment losses are permitted, except for goodwill.