COMPARISON OF GRAP 17 AND IAS 16 GRAP 17 IAS 16 DIFFERENCES

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COMPARISON OF GRAP 17 AND IAS 16 GRAP 17 IAS 16 DIFFERENCES Powered By Docstoc
					COMPARISON OF GRAP 17 AND IAS 16
GRAP 17                                                                   IAS 16                                                               DIFFERENCES
Objective
.01 The objective of this Standard is to prescribe the accounting         01. The objective of this Standard is to prescribe the accounting
   treatment for property, plant and equipment so that the users of           treatment for property, plant and equipment so that users of     Paragraph similar.
   financial statements can discern information about an entity’s             the financial statements can discern information about an
   investment in its property, plant and equipment and the                    entity’s investment in its property, plant and equipment and
   changes in such investment. The principal issues in accounting             the changes in such investment. The principal issues in
   for property, plant and equipment are the recognition of the               accounting for property, plant and equipment are the
   assets, the determination of their carrying amounts and the                recognition of the assets, the determination of their carrying
   depreciation charges and impairment losses to be recognised                amounts and the depreciation charges and impairment losses
   in relation to them.                                                       to be recognised in relation to them.

Scope
.02 An entity that prepares and presents financial statements             .02 This Standard shall be applied in accounting for property,       Wording differences between GRAP 17 and IAS 16 but
   under the accrual basis of accounting shall apply this Standard           plant and equipment, except when another Standard requires        principle is similar - no affect on initial adoption of GRAP
   in accounting for property, plant and equipment, except:                  or permits a different accounting treatment.                      17.

(a) when a different accounting treatment has been adopted in             .03 This Standard does not apply to:
    accordance with another Standard of GRAP,
                                                                          (a) property, plant and equipment classified as held for sale in
(b) property, plant and equipment classified as held for sale in              accordance with IFRS 5 Non-Current Assets Held for Sale
    accordance with the Standard of GRAP on Non-Current Assets                and Discontinued Operations,
    Held for Sale and Discontinued Operations,
                                                                          (b) biological assets related to agricultural activity (see IAS 41
(c) biological assets related to agricultural activity (see Standard of       Agriculture), and
    GRAP on Agriculture), and
                                                                          (c) the recognition and measurement of exploration and
(d) mineral rights, and mineral reserves such as oil, natural gas            evaluation assets (see IFRS 6 Exploration for and Evaluation
    and similar non-regenerative resource.                                   of Mineral Resources); or

However, this Standard applies to property, plant and equipment           (d) mineral rights, and mineral reserves such as oil, natural gas
used to develop or maintain the assets described in (c) and (d).              and similar non-regenerative resource.

                                                                          However, this Standard applies to property, plant and equipment
                                                                          used to develop or maintain the assets described in (b) - (d).

.03 This Standard applies to property, plant and equipment                                                                                     Additional commentary has been included in GRAP 17
   including:                                                                                                                                  (similar to IPSAS 17) to clarify the applicability of GRAP
                                                                                                                                               17 to the public sector – no affect on initial adoption of
(a) specialist military equipment, and                                                                                                         GRAP 17.

(b) infrastructure assets.
.04 Other Standards of GRAP may require recognition of an item            .04 Other Standards may require recognition of an item of            Paragraph similar.
    of property, plant and equipment based on an approach                    property, plant and equipment based on an approach different
    different from that in this Standard. For example, the Standard          from that in this Standard. For example, IAS 17 Leases
    of GRAP on Leases requires an entity to evaluate its                     requires an entity to evaluate its recognition of an item of
    recognition of an item of leased property, plant and equipment           leased property, plant and equipment on the basis of the
    on the basis of the transfer of risks and rewards. However, in           transfer of risks and rewards. However, in such cases other
    such cases other aspects of the accounting treatment for these           aspects of the accounting treatment for these assets,
    assets, including depreciation, are prescribed by this Standard.         including depreciation, are prescribed by this Standard.


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GRAP 17                                                                  IAS 16                                                               DIFFERENCES
.05 An entity shall apply this Standard to property that is being        05. An entity shall apply this Standard to property that is being    Paragraph similar.
   constructed or developed for future use as investment property           constructed or developed for future use as investment
   but does not yet satisfy the definition of “investment property” in      property but does not yet satisfy the definition of ‘investment
   the Standard of GRAP on Investment Property. Once the                    property’ in IAS 40 Investment Property. Once the
   construction or development is complete, the property                    construction or development is complete, the property
   becomes an investment property and the entity is required to             becomes investment property and the entity is required to
   apply the Standard of GRAP on Investment Property. The                   apply IAS 40. IAS 40 also applies to investment property that
   Standard of GRAP on Investment Property also applies to an               is being redeveloped for continued future use as investment
   investment property that is being redeveloped for continued              property. An entity using the cost model for investment
   future use as investment property. An entity using the cost              property in accordance with IAS 40 shall use the cost model
   model for investment property in accordance with the Standard            in this Standard.
   of GRAP on Investment Property shall use the cost model in
   this Standard.
Heritage assets
.06 This Standard does not require an entity to recognise heritage                                                                            Public sector specific guidance is included in GRAP 17
    assets that would otherwise meet the definition of, and                                                                                   (similar to IPSAS 17) on heritage assets. GRAP 17 does
    recognition criteria for, property, plant and equipment. If an                                                                            not require or prohibit the recognition of heritage assets
    entity does recognise heritage assets, it must apply the                                                                                  but if an entity recognises heritage assets the entity
    disclosure requirements of this Standard and may, but is not                                                                              needs to comply with GRAP 17 disclosure requirements.
    required to, apply the measurement requirements of this
    Standard.                                                                                                                                 Public entities that recognise heritage assets need to
                                                                                                                                              comply with the transitional provisions provided for in
                                                                                                                                              GRAP 17.
.07 Some assets are described as “heritage assets” because of
   their cultural, environmental or historical significance. Examples
   of heritage assets include historical buildings and monuments,
   archaeological sites, conservation areas and nature reserves,                                                                              Public sector specific guidance is included in GRAP 17
   and works of art. Certain characteristics, including the                                                                                   (similar to IPSAS 17) on heritage assets. GRAP 17 does
   following, are often displayed by heritage assets (although                                                                                not require or prohibit the recognition of heritage assets
   these characteristics are not exclusive to such assets):                                                                                   but if an entity recognises heritage assets the entity
                                                                                                                                              needs to comply with GRAP 17 disclosure requirements.
(a) their value in cultural, environmental, educational and historical
    terms is unlikely to be fully reflected in a financial value based                                                                        Public entities that recognise heritage assets need to
    purely on a market price,                                                                                                                 comply with the transitional provisions provided for in
                                                                                                                                              GRAP 17.
(b) legal and/or statutory obligations may impose prohibitions or
    severe restrictions on disposal by sale,

(c) they are often irreplaceable and their value may increase over
    time even if their physical condition deteriorates, and

(d) it may be difficult to estimate their useful lives, which in some
    cases could be several hundred years.

    Public sector entities may have large holdings of heritage
    assets that have been acquired over many years and by
    various means, including purchase, donation, bequest and
    sequestration. These assets are rarely held for their ability to
    generate cash inflows, and there may be legal or social
    obstacles to using them for such purposes.
.08Some heritage assets have service potential other than their                                                                               Public sector specific guidance is included in GRAP 17
   heritage value, for example, an historic building being used for                                                                           (similar to IPSAS 17) on heritage assets. GRAP 17 does



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GRAP 17                                                                   IAS 16                                                                DIFFERENCES
   office accommodation. In these cases, they may be recognised                                                                                 not require or prohibit the recognition of heritage assets
   and measured on the same basis as other items of property,                                                                                   but if an entity recognises heritage assets the entity
   plant and equipment. For other heritage assets, their service                                                                                needs to comply with GRAP 17 disclosure requirements.
   potential is limited to their heritage characteristics, for example,
   monuments and ruins. The existence of alternative service                                                                                    Public entities that recognise heritage assets need to
   potential can affect the choice of measurement base.                                                                                         comply with the transitional provisions provided for in
                                                                                                                                                GRAP 17.
.09The disclosure requirements in paragraphs .82 - .89 require
   entities to make disclosures about recognised assets.                                                                                        Public sector specific guidance is included in GRAP 17
   Therefore, entities that recognise heritage assets are required                                                                              (similar to IPSAS 17) on heritage assets. GRAP 17 does
   to disclose in respect of those assets such matters as, for                                                                                  not require or prohibit the recognition of heritage assets
   example,:                                                                                                                                    but if an entity recognises heritage assets the entity
                                                                                                                                                needs to comply with GRAP 17 disclosure requirements.
(a) the measurement basis used,
                                                                                                                                                Public entities that recognise heritage assets need to
(b) the depreciation method used, if any,                                                                                                       comply with the transitional provisions provided for in
                                                                                                                                                GRAP 17.
(c) the gross carrying amount,

(d) the accumulated depreciation at the end of the period, if any,
    and

(e) a reconciliation of the carrying amount at the beginning and end
    of the period showing certain components thereof.
Definitions
.10 The following terms are used in this Standard with the                .06 The following terms are used in this Standard with the
   meanings specified:                                                       meanings specified:                                                GRAP 17 has a different set of definitions of technical
                                                                                                                                                terms to IAS 16 but similar to IPSAS 17.
Carrying amount is the amount at which an asset is recognised             Carrying amount is the amount at which an asset is recognised
after deducting any accumulated depreciation and accumulated              after deducting any accumulated depreciation and accumulated          Terminology differences between GRAP 17 and IAS 16
impairment losses.                                                        impairment losses.                                                    for example profit or loss vs surplus or deficit and net
                                                                                                                                                assets vs equity – these are public sector specific
Class of property, plant and equipment means a grouping of                Cost is the amount of cash or cash equivalents paid or the fair       differences but because meanings of definitions is similar
assets of a similar nature or function in an entity’s operations, that    value of the other consideration given to acquire an asset at the     there is no affect on initial adoption of GRAP 17.
is shown as a single item for the purpose of disclosure in the            time of its acquisition or construction or, where applicable, the
financial statements.                                                     amount attributed to that asset when initially recognised in          GRAP 17 definitions incorporate the concept of “service
                                                                          accordance with the specific requirements of other IFRSs, eg          potential” and “impairment of cash and non-cash-
Cost is the amount of cash or cash equivalents paid or the fair           IFRS 2 Share-based Payment.                                           generating assets”– public sector specific differences so
value of the other consideration given to acquire an asset at the                                                                               no affect on initial adoption of GRAP 17.
time of its acquisition or construction or, where applicable, the         Depreciable amount is the cost of an asset, or other amount
amount attributed to that asset when initially recognised in              substituted for cost, less its residual value.
accordance with the specific requirements of other Standards of
GRAP.                                                                     Depreciation is the systematic allocation of the depreciable
                                                                          amount of an asset over its useful life.
Depreciable amount is the cost of an asset, or other amount
substituted for cost, less its residual value.                            Entity-specific value is the present value of the cash flows an
                                                                          entity expects to arise from the continuing use of an asset and
Depreciation is the systematic allocation of the depreciable              from its disposal at the end of its useful life or expects to incur
amount of an asset over its useful life.                                  when settling a liability.

Entity-specific value is the present value or service potential of        Fair value is the amount for which an asset could be exchanged
the cash flows an entity expects to arise from the continuing use of      between knowledgeable, willing parties in an arm’s length



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GRAP 17                                                                   IAS 16                                                                DIFFERENCES
an asset and from its disposal at the end of its useful life or           transaction.
expects to incur when settling a liability.
                                                                          An impairment loss is the amount by which the carrying amount
Fair value is the amount for which an asset could be exchanged,           of an asset exceeds its recoverable amount.
or a liability settled, between knowledgeable, willing parties in an
arm’s length transaction.                                                 Property, plant and equipment are tangible items that:

An impairment loss of a cash-generating asset is the amount by            (a) are held for use in the production or supply of goods or
which the carrying amount of an asset exceeds its recoverable                 services, for rental to others, or for administrative purposes;
amount.                                                                       and
                                                                          (b) are expected to be used during more than one period.
An impairment loss of a non-cash-generating asset is the
amount by which the carrying amount of an asset exceeds its               Recoverable amount is the higher of an asset’s net selling price
recoverable service amount.                                               and its value in use.

Property, plant and equipment are tangible items that:                    The residual value of an asset is the estimated amount that an
                                                                          entity would currently obtain from disposal of the asset, after
(a) are held for use in the production or supply of goods or              deducting the estimated costs of disposal, if the asset were
    services, for rental to others, or for administrative purposes,       already of the age and in the condition expected at the end of its
    and                                                                   useful life.

(b) are expected to be used during more than one reporting period.        Useful life is:

Recoverable amount is the higher of a cash-generating asset’s             (a) the period over which an asset is expected to be available for
net selling price and its value in use.                                       use by an entity; or
                                                                          (b) the number of production or similar units expected to be
Recoverable service amount is the higher of a non-cash-                       obtained from the asset by an entity.
generating asset’s fair value less costs to sell and its value in use.

The residual value of an asset is the estimated amount that an
entity would currently obtain from disposal of the asset, after
deducting the estimated costs of disposal, if the asset were already
of the age and in the condition expected at the end of its useful life.

Useful life is:

(a) the period over which an asset is expected to be available for
    use by an entity, or
(b) the number of production or similar units expected to be
    obtained from the asset by an entity.
Recognition
.11 The cost of an item of property, plant and equipment shall be         .07 The cost of an item of property, plant and equipment shall be     Paragraph similar.
   recognised as an asset if, and only if:                                    recognised as an asset if, and only if:

(a) it is probable that future economic benefits or service potential     (a) it is probable that future economic benefits associated with      (b) - GRAP 17 takes into account that entities might not
    associated with the item will flow to the entity, and                     the item will flow to the entity; and                             have cost records and therefore have to determine the
                                                                                                                                                Fair value of the investment property to recognised the
(b) the cost or fair value of the item can be measured reliably.          (b) the cost of the item can be measured reliably.                    asset - no affect on initial adoption of GRAP 17.
.12 Spare parts and servicing equipment are usually carried as            .08 Spare parts and servicing equipment are usually carried as        Terminology differences between GRAP 17 and IAS 16
    inventory in terms of the Standard of GRAP on Inventories and             inventory and recognised in profit or loss as consumed.           but principle in paragraph similar - no affect on initial
    recognised in surplus or deficit as consumed. However, major              However, major spare parts and stand-by equipment qualify         adoption of GRAP 17.
    spare parts and stand-by equipment qualify as property, plant             as property, plant and equipment when an entity expects to



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GRAP 17                                                                 IAS 16                                                               DIFFERENCES
   and equipment when an entity expects to use them during                 use them during more than one period. Similarly, if the spare
   more than one period. Similarly, if the spare parts and servicing       parts and servicing equipment can be used only in connection
   equipment can be used only in connection with an item of                with an item of property, plant and equipment, they are
   property, plant and equipment, they are accounted for as                accounted for as property, plant and equipment.
   property, plant and equipment
.13 This Standard does not prescribe the unit of measure for            .09 This Standard does not prescribe the unit of measure for
   recognition, i.e. what constitutes an item of property, plant and       recognition, ie what constitutes an item of property, plant and   Paragraph similar.
   equipment. Thus, judgement is required in applying the                  equipment. Thus, judgement is required in applying the
   recognition criteria to an entity’s specific circumstances. It may      recognition criteria to an entity’s specific circumstances. It
   be appropriate to aggregate individually insignificant items,           may be appropriate to aggregate individually insignificant
   such as moulds, tools and dies, and to apply the criteria to the        items, such as moulds, tools and dies, and to apply the
   aggregate value.                                                        criteria to the aggregate value.
.14 An entity evaluates under this recognition principle all its        .10 An entity evaluates under this recognition principle all its
   property, plant and equipment costs at the time they are                property, plant and equipment costs at the time they are          Paragraph similar.
   incurred. These costs include costs incurred initially to acquire       incurred. These costs include costs incurred initially to
   or construct an item of property, plant and equipment and costs         acquire or construct an item of property, plant and equipment
   incurred subsequently to add to, replace part of, or service it.        and costs incurred subsequently to add to, replace part of, or
                                                                           service it.
Infrastructure assets
.15 Some assets are commonly described as “infrastructure
   assets”. While there is no universally accepted definition of                                                                             Additional commentary has been included in GRAP 17
   infrastructure assets, these assets usually display some or all                                                                           (similar to IPSAS 17) to clarify the applicability of GRAP
   of the following characteristics:                                                                                                         17 to public sector infrastructure assets – no affect on
                                                                                                                                             initial adoption of GRAP 17.
(a) they are part of a system or network,
                                                                                                                                             If public entities need to recognise infrastructure assets in
(b) they are specialised in nature and do not have alternative uses,                                                                         terms of GRAP 17 they need to comply with the
                                                                                                                                             transitional provisions provided for in GRAP 17.
(c) they are immovable, and

(d) they may be subject to constraints on disposal.

Although ownership of infrastructure assets is not confined to
entities in the public sector, significant infrastructure assets are
frequently found in the public sector.
Infrastructure assets meet the definition of property, plant and
equipment and shall be accounted for in accordance with this
Standard. Examples of infrastructure assets include road networks,
sewer systems, water and power supply systems and
communication networks.
Initial costs
.16 Items of property, plant and equipment may be required for          .11 Items of property, plant and equipment may be acquired for
   safety or environmental reasons. The acquisition of such                safety or environmental reasons. The acquisition of such          Terminology differences between GRAP 17 and IAS 16
   property, plant and equipment, although not directly increasing         property, plant and equipment, although not directly              but principle in paragraph similar - no affect on initial
   the future economic benefits or service potential of any                increasing the future economic benefits of any particular         adoption of GRAP 17.
   particular existing item of property, plant and equipment, may          existing item of property, plant and equipment, may be
   be necessary for an entity to obtain the future economic                necessary for an entity to obtain the future economic benefits    Public sector example included in GRAP 17 – no affect
   benefits or service potential from its other assets. Such items of      from its other assets. Such items of property, plant and          on initial adoption of GRAP 17 because principle in GRAP
   property, plant and equipment qualify for recognition as assets         equipment qualify for recognition as assets because they          17 and IAS 16 similar.
   because they enable an entity to derive future economic                 enable an entity to derive future economic benefits from
   benefits or service potential from related assets in excess of          related assets in excess of what could be derived had those
   what could be derived had those items not been acquired. For            items not been acquired. For example, a chemical


Page 5 of 22
GRAP 17                                                                 IAS 16                                                                 DIFFERENCES
   example, fire safety regulations may require a hospital to retro-       manufacturer may install new chemical handling processes to
   fit new sprinkler systems. These enhancements are recognised            comply with environmental requirements for the production
   as an asset because, without them, the entity is unable to              and storage of dangerous chemicals; related plant
   operate the hospital in accordance with the regulations.                enhancements are recognised as an asset because without
   However, the resulting carrying amount of such an asset and             them the entity is unable to manufacture and sell chemicals.
   related assets is reviewed for impairment in accordance with            However, the resulting carrying amount of such an asset and
   the Standard of GRAP on Impairment of Assets.                           related assets is reviewed for impairment in accordance with
                                                                           IAS 36 Impairment of Assets.

.17Specialist military equipment will normally meet the definition of                                                                          Additional commentary has been included in GRAP 17
   property, plant and equipment and should be recognised as an                                                                                (similar to IPSAS 17) to clarify the applicability of GRAP
   asset in accordance with this Standard.                                                                                                     17 to the public sector

                                                                                                                                               Public entities that recognise such assets need to comply
                                                                                                                                               with the transitional provisions provided for in GRAP 17.
Subsequent cost
.18 Under the recognition principle in paragraph .11, an entity does    .12 Under the recognition principle in paragraph 7, an entity does
    not recognise in the carrying amount of an item of property,            not recognise in the carrying amount of an item of property,       Terminology differences between GRAP 17 and IAS 16
    plant and equipment the costs of the day-to-day servicing of            plant and equipment the costs of the day-to-day servicing of       but principle similar - no affect on initial adoption of GRAP
    the item. Rather, these costs are recognised in surplus or              the item. Rather, these costs are recognised in profit or loss     17.
    deficit as incurred. Costs of day-to-day servicing are primarily        as incurred. Costs of day-to-day servicing are primarily the
    the costs of labour and consumables, and may include the cost           costs of labour and consumables, and may include the cost of
    of small parts. The purpose of these expenditures is often              small parts. The purpose of these expenditures is often
    described as for the ‘repairs and maintenance’ of the item of           described as for the ‘repairs and maintenance’ of the item of
    property, plant and equipment.                                          property, plant and equipment.
.19 Parts of some items of property, plant and equipment may            .13 Parts of some items of property, plant and equipment may
    require replacement at regular intervals. For example, a road           require replacement at regular intervals. For example, a           Public sector example included in GRAP 17 – no affect
    may need resurfacing every few years, a furnace may require             furnace may require relining after a specified number of hours     on initial adoption of GRAP 17 because principle in GRAP
    relining after a specified number of hours of use, or aircraft          of use, or aircraft interiors such as seats and galleys may        17 and IAS 16 similar.
    interiors such as seats and galleys may require replacement             require replacement several times during the life of the
    several times during the life of the airframe. Items of property,       airframe. Items of property, plant and equipment may also be       Terminology differences between GRAP 17 and IAS 16
    plant and equipment may also be required to make a less                 acquired to make a less frequently recurring replacement,          but principle similar - no affect on initial adoption of GRAP
    frequently recurring replacement, such as replacing the interior        such as replacing the interior walls of a building, or to make a   17.
    walls of a building, or to make a non-recurring replacement.            nonrecurring replacement. Under the recognition principle in
    Under the recognition principle in paragraph .11, an entity             paragraph 7, an entity recognises in the carrying amount of
    recognises in the carrying amount of an item of property, plant         an item of property, plant and equipment the cost of replacing
    and equipment the cost of replacing part of such an item when           part of such an item when that cost is incurred if the
    that cost is incurred if the recognition criteria are met. The          recognition criteria are met. The carrying amount of those
    carrying amount of those parts that are replaced is                     parts that are replaced is derecognised in accordance with
    derecognised in accordance with the derecognition provisions            the derecognition provisions of this Standard (see paragraphs
    of this Standard (see paragraphs .76 -.81).                             67–72).
.20 A condition of continuing to operate an item of property, plant     .14 A condition of continuing to operate an item of property, plant
    and equipment (for example, an aircraft) may be performing              and equipment (for example, an aircraft) may be performing
    regular major inspections for faults regardless of whether parts        regular major inspections for faults regardless of whether         Paragraph similar.
    of the item are replaced. When each major inspection is                 parts of the item are replaced. When each major inspection is
    performed, its cost is recognised in the carrying amount of the         performed, its cost is recognised in the carrying amount of the
    item of property, plant and equipment as a replacement if the           item of property, plant and equipment as a replacement if the
    recognition criteria are satisfied. Any remaining carrying              recognition criteria are satisfied. Any remaining carrying
    amount of the cost of the previous inspection (as distinct from         amount of the cost of the previous inspection (as distinct from
    physical parts) is derecognised. This occurs regardless of              physical parts) is derecognised. This occurs regardless of
    whether the cost of the previous inspection was identified in the       whether the cost of the previous inspection was identified in
    transaction in which the item was acquired or constructed. If           the transaction in which the item was acquired or constructed.



Page 6 of 22
GRAP 17                                                                  IAS 16                                                                DIFFERENCES
   necessary, the estimated cost of a future similar inspection may         If necessary, the estimated cost of a future similar inspection
   be used as an indication of what the cost of the existing                may be used as an indication of what the cost of the existing
   inspection component was when the item was acquired or                   inspection component was when the item was acquired or
   constructed.                                                             constructed.
Measurement at recognition
.21 An item of property, plant and equipment that qualifies for          .15 An item of property, plant and equipment that qualifies for       Paragraph similar.
    recognition as an asset shall be measured at its cost.                  recognition as an asset shall be measured at its cost.
.22 Where an asset is acquired at no cost, or for a nominal cost, its                                                                          Public sector specific guidance included in GRAP 17
    cost is its fair value as at the date of acquisition.                                                                                      (similar to IPSAS 17) – no affect on initial adoption of
                                                                                                                                               GRAP 17 even though explanatory guidance could be
                                                                                                                                               provided to explain this principle as part of the
                                                                                                                                               implementation guidance.
.23 An item of property, plant and equipment may be gifted or
   contributed to the entity. For example, land may be contributed                                                                             Public sector specific guidance included in GRAP 17
   to a municipality by a developer at nil or nominal consideration,                                                                           (similar to IPSAS 17) – no affect on initial adoption of
   to enable the municipality to develop parks, roads and paths in                                                                             GRAP 17 even though explanatory guidance could be
   the development. An asset may also be acquired at nil or                                                                                    provided to explain this principle as part of the
   nominal consideration through the exercise of powers of                                                                                     implementation guidance.
   sequestration. Under these circumstances the cost of the item
   is its fair value as at the date it is acquired.
.24 For the purposes of this Standard, the measurement at
   recognition of an item of property, plant and equipment,                                                                                    Public sector specific guidance included in GRAP 17
   acquired at no or nominal cost, at its fair consistent with the                                                                             (similar to IPSAS 17) – no affect on initial adoption of
   requirements of paragraph .22 does not constitute a                                                                                         GRAP 17 even though explanatory guidance could be
   revaluation. Accordingly, the revaluation requirements in                                                                                   provided to explain this principle as part of the
   paragraph .39 and the supporting commentary in paragraphs                                                                                   implementation guidance.
   .40 - .45 only apply where an entity elects to revalue an item of
   property, plant and equipment in subsequent reporting periods.
Element of cost
.25 The cost of an item of property, plant and equipment                 .16 The cost of an item of property, plant and equipment              Paragraph similar.
   comprises:                                                               comprises:

(a) its purchase price, including import duties and non-refundable       (a) its purchase price, including import duties and non-refundable    (a) to (c) – similar.
    purchase taxes, after deducting trade discounts and rebates.             purchase taxes, after deducting trade discounts and rebates.

(b) any costs directly attributable to bringing the asset to the         (b) any costs directly attributable to bringing the asset to the
    location and condition necessary for it to be capable of                 location and condition necessary for it to be capable of
    operating in the manner intended by management.                          operating in the manner intended by management.

(c) the initial estimate of the costs of dismantling and removing the    (c) the initial estimate of the costs of dismantling and removing
    item and restoring the site on which it is located, the obligation       the item and restoring the site on which it is located, the
    for which an entity incurs either when the item is acquired or as        obligation for which an entity incurs either when the item is
    a consequence of having used the item during a particular                acquired or as a consequence of having used the item during
    period for purposes other than to produce inventories during             a particular period for purposes other than to produce
    that period.                                                             inventories during that period.
.26 Examples of directly attributable costs are:                         .17 Examples of directly attributable costs are:                      Paragraph similar.

(a) costs of employee benefits (as defined in the Standard of            (a) costs of employee benefits (as defined in IAS 19 Employee         (a) to (f) – sub-paragraphs similar.
    Generally Recognised Accounting Practice on Employee                     Benefits) arising directly from the construction or acquisition
    Benefits) arising directly from the construction or acquisition of       of the item of property, plant and equipment;
    the item of property, plant and equipment,
                                                                         (b) costs of site preparation;


Page 7 of 22
GRAP 17                                                                 IAS 16                                                                  DIFFERENCES
(b) costs of site preparation,
                                                                        (c) initial delivery and handling costs;
(c) initial delivery and handling costs,
                                                                        (d) installation and assembly costs;
(d) installation and assembly costs,
                                                                        (e) costs of testing whether the asset is functioning properly, after
(e) costs of testing whether the asset is functioning properly, after       deducting the net proceeds from selling any items produced
    deducting the net proceeds from selling any items produced              while bringing the asset to that location and condition (such
    while bringing the asset to that location and condition (such as        as samples produced when testing equipment); and
    samples produced when testing equipment), and
                                                                        (f) professional fees.
(f) professional fees.
.27 An entity applies the Standard of GRAP on Inventories to the        .18 An entity applies IAS 2 Inventories to the costs of obligations
     costs of obligations for dismantling, removing and restoring the       for dismantling, removing and restoring the site on which an        Paragraph similar.
     site on which an item is located that are incurred during a            item is located that are incurred during a particular period as
     particular period as a consequence of having used the item to          a consequence of having used the item to produce
     produce inventories during that period. The obligations for            inventories during that period. The obligations for costs
     costs accounted for in accordance with the Standard of GRAP            accounted for in accordance with IAS 2 or IAS 16 are
     on Inventories or this Standard are recognised and measured            recognised and measured in accordance with IAS 37
     in accordance with the Standard of GRAP on Provisions,                 Provisions, Contingent Liabilities and Contingent Assets.
     Contingent Liabilities and Contingent Assets.
.28 Examples of costs that are not the costs of an item of property,    .19 Examples of costs that are not costs of an item of property,
     plant and equipment are:                                              plant and equipment are:                                             Paragraph similar.

(a) costs of opening a new facility,                                    (a) costs of opening a new facility;

(b) costs of introducing a new product or service (including costs      (b) costs of introducing a new product or service (including costs
   of advertising and promotional activities),                              of advertising and promotional activities);

(c) costs of conducting business in a new location or with a new        (c) costs of conducting business in a new location or with a new
    class of customers (including costs of staff training), and             class of customer (including costs of staff training); and

(d) administration and other general overhead costs.                    (d) administration and other general overhead costs.
.29 Recognition of costs in the carrying amount of an item of           .20 Recognition of costs in the carrying amount of an item of
    property, plant and equipment ceases when the item is in the            property, plant and equipment ceases when the item is in the        Paragraph similar.
    location and condition necessary for it to be capable of                location and condition necessary for it to be capable of
    operating in the manner intended by management. Therefore,              operating in the manner intended by management. Therefore,
    costs incurred in using or redeploying an item are not included         costs incurred in using or redeploying an item are not
    in the carrying amount of that item. For example, the following         included in the carrying amount of that item. For example, the
    costs are not included in the carrying amount of an item of             following costs are not included in the carrying amount of an
    property, plant and equipment:                                          item of property, plant and equipment:

(a) costs incurred while an item capable of operating in the manner     (a) costs incurred while an item capable of operating in the
    intended by management has yet to be brought into use or is             manner intended by management has yet to be brought into
    operated at less than full capacity,                                    use or is operated at less than full capacity;

(b) initial operating losses, such as those incurred while demand       (b) initial operating losses, such as those incurred while demand
    for the item’s outputs build up, and                                    for the item’s output builds up; and

(c) costs of relocating or reorganising part or all of the entity‘s     (c) costs of relocating or reorganising part or all of an entity’s
    operations.                                                             operations.
.30 Some operations occur in connection with the construction or        .21 Some operations occur in connection with the construction or
    development of an item of property, plant and equipment, but            development of an item of property, plant and equipment, but        Terminology differences between GRAP 17 and IAS 16


Page 8 of 22
GRAP 17                                                                  IAS 16                                                                DIFFERENCES
   are not necessary to bring the item to the location and                  are not necessary to bring the item to the location and            but principle in paragraph similar - no affect on initial
   condition necessary for it to be capable of operating in the             condition necessary for it to be capable of operating in the       adoption of GRAP 17.
   manner intended by management. These incidental operations               manner intended by management. These incidental
   may occur before or during the construction or development               operations may occur before or during the construction or
   activities. For example, revenue may be earned through using             development activities. For example, income may be earned
   a building site as a car park until construction starts. Because         through using a building site as a car park until construction
   incidental operations are not necessary to bring an item to the          starts. Because incidental operations are not necessary to
   location and condition necessary for it to be capable of                 bring an item to the location and condition necessary for it to
   operating in the manner intended by management, the revenue              be capable of operating in the manner intended by
   and related expenses of incidental operations are recognised in          management, the income and related expenses of incidental
   surplus or deficit and included in their respective classifications      operations are recognised in profit or loss and included in
   of revenue and expense.                                                  their respective classifications of income and expense.
.31 The cost of a self-constructed asset is determined using the         .22 The cost of a self-constructed asset is determined using the
   same principles as for an acquired asset. If an entity makes             same principles as for an acquired asset. If an entity makes       Terminology differences between GRAP 17 and IAS 16
   similar assets for sale in the normal course of business, the            similar assets for sale in the normal course of business, the      but principle in paragraph similar - no affect on initial
   cost of the asset is usually the same as the cost of constructing        cost of the asset is usually the same as the cost of               adoption of GRAP 17.
   an asset for sale (see the Standard of GRAP on Inventories).             constructing an asset for sale (see IAS 2). Therefore, any
   Therefore, any internal surpluses are eliminated in arriving at          internal profits are eliminated in arriving at such costs.
   such costs. Similarly, the cost of abnormal amounts of wasted            Similarly, the cost of abnormal amounts of wasted material,
   material, labour or other resources incurred in self-constructing        labour, or other resources incurred in self-constructing an
   an asset is not included in the cost of the asset. The Standard          asset is not included in the cost of the asset. IAS 23
   of GRAP on Borrowing Costs establishes criteria for the                  Borrowing Costs establishes criteria for the recognition of
   recognition of interest as a component of the carrying amount            interest as a component of the carrying amount of a self-
   of a self-constructed item of property, plant and equipment.             constructed item of property, plant and equipment.
Measurement of cost
.32 The cost of an item of property, plant and equipment is the          .23 The cost of an item of property, plant and equipment is the       Paragraph similar.
   cash price equivalent at the recognition date. If payment is             cash price equivalent at the recognition date. If payment is
   deferred beyond normal credit terms, the difference between              deferred beyond normal credit terms, the difference between
   the cash price equivalent and the total payment is recognised            the cash price equivalent and the total payment is recognised
   as interest over the period of credit unless such interest is            as interest over the period of credit unless such interest is
   recognised in the carrying amount of the item in accordance              recognised in the carrying amount of the item in accordance
   with the allowed alternative treatment in the Standard of GRAP           with the allowed alternative treatment in IAS 23.
   on Borrowing Costs.
.33 One or more items of property, plant and equipment may be            .24 One or more items of property, plant and equipment may be
   acquired in exchange for a non-monetary asset or assets, or a             acquired in exchange for a non-monetary asset or assets, or       Paragraph similar.
   combination of monetary and non monetary assets. The                      a combination of monetary and non-monetary assets. The
   following discussion refers simply to an exchange of one non-             following discussion refers simply to an exchange of one non-
   monetary asset for another, but it also applies to all exchanges          monetary asset for another, but it also applies to all
   described in the preceding sentence. The cost of such an item             exchanges described in the preceding sentence. The cost of
   of property, plant and equipment is measured at fair value                such an item of property, plant and equipment is measured at
   unless (a) the exchange transaction lacks commercial                      fair value unless (a) the exchange transaction lacks
   substance or (b) the fair value of neither the asset received nor         commercial substance or (b) the fair value of neither the asset
   the asset given up is reliably measurable. The acquired item is           received nor the asset given up is reliably measurable. The
   measured in this way even if an entity cannot immediately                 acquired item is measured in this way even if an entity cannot
   derecognise the asset given up. If the acquired item is not               immediately derecognise the asset given up. If the acquired
   measured at fair value, its cost is measured at the carrying              item is not measured at fair value, its cost is measured at the
   amount of the asset given up.                                             carrying amount of the asset given up.
.34 An entity determines whether an exchange transaction has             .25 An entity determines whether an exchange transaction has
   commercial substance by considering the extent to which its               commercial substance by considering the extent to which its       Terminology differences between GRAP 17 and IAS 16
   future cash flows or service potential are expected to change             future cash flows are expected to change as a result of the       but principle in paragraph similar - no affect on initial
   as a result of the transaction. An exchange transaction has               transaction. An exchange transaction has commercial               adoption of GRAP 17.
   commercial substance if:                                                  substance if:



Page 9 of 22
GRAP 17                                                                      IAS 16                                                                  DIFFERENCES
(a) the configuration (risk, timing and amount) of the cash flows or         (a) the configuration (risk, timing and amount) of the cash flows of
    service potential of the asset received differs from the                     the asset received differs from the configuration of the cash
    configuration of the cash flows or service potential of the asset            flows of the asset transferred; or
    transferred, or
                                                                             (b) the entity-specific value of the portion of the entity’s
(b) the entity-specific value of the portion of the entity’s operations         operations affected by the transaction changes as a result of        (a) to (c) - terminology differences between GRAP 17 and
    affected by the transaction changes as a result of the                      the exchange; and                                                    IAS 16 but principle is similar - no affect on initial adoption
    exchange, and                                                                                                                                    of GRAP 17.
                                                                             (c) the difference in (a) or (b) is significant relative to the fair
(c) the difference in (a) or (b) is significant relative to the fair value       value of the assets exchanged.
    of the assets exchanged.
                                                                             For the purpose of determining whether an exchange transaction
For the purpose of determining whether an exchange transaction               has commercial substance, the entity-specific value of the portion
has commercial substance, the entity-specific value of the portion           of the entity’s operations affected by the transaction shall reflect
of the entity’s operations affected by the transaction shall reflect         post-tax cash flows. The result of these analyses may be clear
post-tax cash flows. The result of these analyses may be clear               without an entity having to perform detailed calculations.
without an entity having to perform detailed calculations.
.35 The fair value of an asset for which comparable market                   .26 The fair value of an asset for which comparable market
    transactions do not exist is reliably measurable if (a) the                  transactions do not exist is reliably measurable if (a) the         Paragraph similar.
    variability in the range of reasonable fair value estimates is not           variability in the range of reasonable fair value estimates is
    significant for that asset or (b) the probabilities of the various           not significant for that asset or (b) the probabilities of the
    estimates within the range can be reasonably assessed and                    various estimates within the range can be reasonably
    used in estimating fair value. If an entity is able to determine             assessed and used in estimating fair value. If an entity is able
    reliably the fair value of either the asset received or the asset            to determine reliably the fair value of either the asset received
    given up, then the fair value of the asset given up is used to               or the asset given up, then the fair value of the asset given up
    measure the cost of the asset received unless the fair value of              is used to measure the cost of the asset received unless the
    the asset received is more clearly evident..                                 fair value of the asset received is more clearly evident.
.36 The cost of an item of property, plant and equipment held by a           .27 The cost of an item of property, plant and equipment held by        Paragraph similar.
    lessee under a finance lease is determined in accordance with                a lessee under a finance lease is determined in accordance
    the Standard of GRAP on Leases.                                              with IAS 17 Leases.
                                                                             .28 The carrying amount of an item of property, plant and               Paragraph not included in GRAP 17 as guidance will be
                                                                                 equipment may be reduced by government grants in                    included in Standard of GRAP on Revenue from Non-
                                                                                 accordance with IAS 20 Accounting for Government Grants             Exchange Transactions.
                                                                                 and Disclosure of Government Assistance.
Measurement after recognition
.37 An entity shall choose either the cost model in paragraph .38 or         .29 An entity shall choose either the cost model in paragraph 30        Paragraph similar.
    the revaluation model in paragraph .39 as its accounting policy              or the revaluation model in paragraph 31 as its accounting
    and shall apply that policy to an entire class of property, plant            policy and shall apply that policy to an entire class of
    and equipment.                                                               property, plant and equipment.
Cost model
.38 After recognition as an asset, an item of property, plant and            .30 After recognition as an asset, an item of property, plant and       Paragraph similar.
   equipment shall be carried at its cost less any accumulated                  equipment shall be carried at its cost less any accumulated
   depreciation and any accumulated impairment losses.                          depreciation and any accumulated impairment losses.
Revaluation model
.39 After recognition as an asset, an item of property, plant and            .31 After recognition as an asset, an item of property, plant and       Terminology differences between GRAP 17 and IAS 16
   equipment whose fair value can be measured reliably shall be                 equipment whose fair value can be measured reliably shall be         but principle in paragraph similar - no affect on initial
   carried at a revalued amount, being its fair value at the date of            carried at a revalued amount, being its fair value at the date       adoption of GRAP 17.
   the revaluation less any subsequent accumulated depreciation                 of the revaluation less any subsequent accumulated
   and subsequent accumulated impairment losses. Revaluations                   depreciation and subsequent accumulated impairment losses.
   shall be made with sufficient regularity to ensure that the                  Revaluations shall be made with sufficient regularity to ensure
   carrying amount does not differ materially from that which                   that the carrying amount does not differ materially from that


Page 10 of 22
GRAP 17                                                                IAS 16                                                                DIFFERENCES
   would be determined using fair value at the reporting date.            which would be determined using fair value at the balance
                                                                          sheet date.
.40 The fair value of items of land and buildings is usually           .32 The fair value of land and buildings is usually determined
   determined from market-based evidence by appraisal that is             from market-based evidence by appraisal that is normally           Additional guidance and example included in GRAP
   normally undertaken by professionally qualified valuers. The           undertaken by professionally qualified valuers. The fair value     (similar to IPSAS 17) – no affect on initial adoption of
   fair value of items of plant and equipment is usually their            of items of plant and equipment is usually their market value      GRAP 17 as principles in GRAP 17 and IAS 16 are
   market value determined by appraisal. For many assets, the             determined by appraisal.                                           similar.
   fair value will be readily ascertainable by reference to quoted
   prices in an active and liquid market. For example, current
   market prices can usually be obtained for land, non-specialised
   buildings, motor vehicles and many types of plant and
   equipment.
.41 For some assets, it may be difficult to establish their market                                                                           Additional commentary has been included in GRAP 17
   value because of the absence of market transactions for these                                                                             (similar to IPSAS 17) to clarify the applicability of GRAP
   assets. Some entities may have significant holdings of such                                                                               17 to the public sector – no affect on initial adoption of
   assets.                                                                                                                                   GRAP 17.

.42 Where no evidence is available to determine the market value       33 If there is no market-based evidence of fair value because of
    in an active and liquid market of an item of property, the fair       the specialised nature of the item of property, plant and          Additional commentary has been included in GRAP 17
    value of the item may be established by reference to other            equipment and the item is rarely sold, except as part of a         (similar to IPSAS 17) to clarify the applicability of GRAP
    items with similar characteristics, in similar circumstances and      continuing business, an entity may need to estimate fair value     17 to the public sector – no affect on initial adoption of
    location. For example, the fair value of vacant land that has         using an income or a depreciated replacement cost approach.        GRAP 17.
    been held for a long period during which time there have been
    few transactions may be estimated by reference to the market                                                                             Public sector specific examples included in GRAP 17.
    value of land with similar features and topography in a similar
    location for which market evidence is available. In the case of
    specialised buildings and other man-made structures, an entity
    may need to estimate fair value using a depreciated
    replacement cost approach. In many cases, the depreciated
    replacement cost of an asset can be established by reference
    to the buying price of a similar asset with similar remaining
    service potential in an active and liquid market. In some cases,
    an asset’s reproduction cost will be the best indicator of its
    replacement cost. For example, in the event of loss, a
    parliament building may be reproduced rather than replaced
    with alternative accommodation because of its significance to
    the community.
.43 For items of plant and equipment of a specialised nature, fair
    value may be based on, for example, either reproduction cost                                                                             Additional commentary has been included in GRAP 17
    or on depreciated replacement cost. The depreciated                                                                                      (similar to IPSAS 17) to clarify the applicability of GRAP
    replacement cost of an item of plant or equipment may be                                                                                 17 to the public sector – no affect on initial adoption of
    established by reference to the market buying price of                                                                                   GRAP 17.
    components used to produce the asset or the indexed price for
    the same or a similar asset based on a price for a previous
    period. When the indexed price method is used, judgment is
    required to determine whether production technology has
    changed significantly over the period, and whether the capacity
    of the reference asset is the same as that of the asset being
    valued.
.44 The frequency of revaluations depends upon the changes in          .34 The frequency of revaluations depends upon the changes in
    the fair values of the items of property, plant and equipment          fair values of the items of property, plant and equipment being   Paragraph similar.
    being revalued. When the fair value of a revalued asset differs        revalued. When the fair value of a revalued asset differs



Page 11 of 22
GRAP 17                                                                IAS 16                                                                  DIFFERENCES
   materially from its carrying amount, a further revaluation is          materially from its carrying amount, a further revaluation is
   required. Some items of property, plant and equipment                  required. Some items of property, plant and equipment
   experience significant and volatile changes in fair value, thus        experience significant and volatile changes in fair value, thus
   necessitating annual revaluation. Such frequent revaluations           necessitating annual revaluation. Such frequent revaluations
   are unnecessary for items of property, plant and equipment             are unnecessary for items of property, plant and equipment
   with only insignificant changes in fair value. Instead, it may be      with only insignificant changes in fair value. Instead, it may be
   necessary to revalue the item only every three or five years.          necessary to revalue the item only every three or five years.
.45 When an item of property, plant and equipment is revalued,         .35 When an item of property, plant and equipment is revalued,
   any accumulated depreciation at the date of the revaluation is         any accumulated depreciation at the date of the revaluation is
   treated in one of the following ways:                                  treated in one of the following ways:                                Paragraph similar.

(a) restated proportionately with the change in the gross carrying     (a) restated proportionately with the change in the gross carrying
    amount of the asset so that the carrying amount of the asset           amount of the asset so that the carrying amount of the asset
    after revaluation equals its revalued amount. This method is           after revaluation equals its revalued amount. This method is
    often used when an asset is revalued by means of applying an           often used when an asset is revalued by means of applying
    index to its depreciated replacement cost.                             an index to its depreciated replacement cost.

(b) eliminated against the gross carrying amount of the asset and      (b) eliminated against the gross carrying amount of the asset and
    the net amount restated to the revalued amount of the asset.           the net amount restated to the revalued amount of the asset.
    This method is often used for buildings.                               This method is often used for buildings.

The amount of the adjustment arising on the restatement or             The amount of the adjustment arising on the restatement or
elimination of accumulated depreciation forms part of the increase     elimination of accumulated depreciation forms part of the
or decrease in carrying amount that is accounted for in accordance     increase or decrease in carrying amount that is accounted for in
with paragraphs .49 and .50.                                           accordance with paragraphs 39 and 40.
.46 If an item of property, plant and equipment is revalued, the       .36 If an item of property, plant and equipment is revalued, the        Paragraph similar.
    entire class of property, plant and equipment to which that            entire class of property, plant and equipment to which that
    asset belongs shall be revalued.                                       asset belongs shall be revalued.

.47 A class of property, plant and equipment is a grouping of          37 A class of property, plant and equipment is a grouping of
   assets of a similar nature or function in an entity’s operations.      assets of a similar nature and use in an entity’s operations.        Additional public sector examples included in GRAP 17
   The following are examples of separate classes:                        The following are examples of separate classes:                      (similar to IPSAS 17) – no affect on initial adoption of
                                                                                                                                               GRAP 17.
(a) land,                                                              (a) land;
(b) operational buildings,                                             (b) land and buildings;
(c) roads,                                                             (c) machinery;
(d) machinery,                                                         (d) ships;
(e) electricity transmission networks,                                 (e) aircraft;
(f) ships,                                                             (f) motor vehicles;
(g) aircraft,                                                          (g) furniture and fixtures; and
(h) specialist military equipment,                                     (h) office equipment.
(i) motor vehicles,
(j) furniture and fixtures,
(k) office equipment, and
(l) oil rigs.
.48 The items within a class of property, plant and equipment are      .38 The items within a class of property, plant and equipment are
     revalued simultaneously to avoid selective revaluation of             revalued simultaneously to avoid selective revaluation of           Paragraph similar.
     assets and the reporting of amounts in the financial statements       assets and the reporting of amounts in the financial
     that are a mixture of costs and values as at different dates.         statements that are a mixture of costs and values as at
     However, a class of assets may be revalued on a rolling basis         different dates. However, a class of assets may be revalued
     provided revaluation of the class of assets is completed within       on a rolling basis provided revaluation of the class of assets is
     a short period and provided the revaluations are kept up to           completed within a short period and provided the revaluations
     date.                                                                 are kept up to date.


Page 12 of 22
GRAP 17                                                                  IAS 16                                                                   DIFFERENCES
.49 If an asset’s carrying amount is increased as a result of a          .39 If an asset’s carrying amount is increased as a result of a          Terminology differences between GRAP 17 and IAS 16
   revaluation, the increase shall be credited directly to a                revaluation, the increase shall be credited directly to equity        but principle similar - no affect on initial adoption of GRAP
   revaluation surplus. However, the increase shall be recognised           under the heading of revaluation surplus. However, the                17.
   in surplus or deficit to the extent that it reverses a revaluation       increase shall be recognised in profit or loss to the extent that
   decrease of the same asset previously recognised in surplus or           it reverses a revaluation decrease of the same asset
   deficit.                                                                 previously recognised in profit or loss.
.50 If an asset’s carrying amount is decreased as a result of a          .40 If an asset’s carrying amount is decreased as a result of a          Terminology differences between GRAP 17 and IAS 16
   revaluation, the decrease shall be recognised in surplus or              revaluation, the decrease shall be recognised in profit or loss.      but principle similar - no affect on initial adoption of GRAP
   deficit. However, the decrease shall be debited directly to a            However, the decrease shall be debited directly to equity             17.
   revaluation surplus to the extent of any credit balance existing         under the heading of revaluation surplus to the extent of any
   in the revaluation surplus in respect of that asset.                     credit balance existing in the revaluation surplus in respect of
                                                                            that asset.

.51 The revaluation surplus included in net assets in respect of an      .41 The revaluation surplus included in equity in respect of an
    item of property, plant and equipment may be transferred                item of property, plant and equipment may be transferred              Terminology differences between GRAP 17 and IAS 16
    directly to accumulated surpluses or deficits when the asset is         directly to retained earnings when the asset is derecognised.         but principle in paragraph similar - no affect on initial
    derecognised. This may involve transferring the whole of the            This may involve transferring the whole of the surplus when           adoption of GRAP 17.
    surplus when the asset is retired or disposed of. However,              the asset is retired or disposed of. However, some of the
    some of the surplus may be transferred as the asset is used by          surplus may be transferred as the asset is used by an entity.
    an entity. In such a case, the amount of the surplus transferred        In such a case, the amount of the surplus transferred would
    would be the difference between depreciation based on the               be the difference between depreciation based on the revalued
    revalued carrying amount of the asset and depreciation based            carrying amount of the asset and depreciation based on the
    on the asset’s original cost. Transfers from revaluation surplus        asset’s original cost. Transfers from revaluation surplus to
    to accumulated surpluses or deficits are not made through               retained earnings are not made through profit or loss.
    surplus or deficit.
.52 The effect of taxes on revenue, if any, resulting from the           .42 The effects of taxes on income, if any, resulting from the           Paragraph similar.
    revaluation of property, plant and equipment are recognised             revaluation of property, plant and equipment are recognised
    and disclosed in accordance with the International Accounting           and disclosed in accordance with IAS 12 Income Taxes.
    Standard on Income Taxes.
Depreciation
.53 Each part of an item of property, plant and equipment with a         .43 Each part of an item of property, plant and equipment with a         Paragraph similar.
    cost that is significant in relation to the total cost of the item       cost that is significant in relation to the total cost of the item
    shall be depreciated separately.                                         shall be depreciated separately.
.54 An entity allocates the amount initially recognised in respect of    .44 An entity allocates the amount initially recognised in respect
    an item of property, plant and equipment to its significant parts        of an item of property, plant and equipment to its significant       Paragraph similar.
    and depreciates separately each such part. For example, it               parts and depreciates separately each such part. For
    may be appropriate to depreciate separately the airframe and             example, it may be appropriate to depreciate separately the
    engines of an aircraft, whether owned or subject to a finance            airframe and engines of an aircraft, whether owned or subject
    lease.                                                                   to a finance lease.
.55 A significant part of an item of property, plant and equipment       .45 A significant part of an item of property, plant and equipment
    may have a useful life and a depreciation method that are the            may have a useful life and a depreciation method that are the        Paragraph similar.
    same as the useful life and the depreciation method of another           same as the useful life and the depreciation method of
    significant part of that same item. Such parts may be grouped            another significant part of that same item. Such parts may be
    in determining the depreciation charge.                                  grouped in determining the depreciation charge.
.56 To the extent that an entity depreciates separately some parts       .46 To the extent that an entity depreciates separately some
    of an item of property, plant and equipment, it also depreciates         parts of an item of property, plant and equipment, it also           Paragraph similar.
    separately the remainder of the item. The remainder consists of          depreciates separately the remainder of the item. The
    the parts of the item that are individually not significant. If an       remainder consists of the parts of the item that are
    entity has varying expectations for these parts, approximation           individually not significant. If an entity has varying
    techniques may be necessary to depreciate the remainder in a             expectations for these parts, approximation techniques may
    manner that faithfully represents the consumption pattern                be necessary to depreciate the remainder in a manner that
    and/or useful life of its parts.                                         faithfully represents the consumption pattern and/or useful life



Page 13 of 22
GRAP 17                                                                   IAS 16                                                                    DIFFERENCES
                                                                              of its parts.
.57 An entity may choose to depreciate separately the parts of an         .47 An entity may choose to depreciate separately the parts of an         Paragraph similar.
    item that do not have a cost that is significant in relation to the       item that do not have a cost that is significant in relation to the
    total cost of the item.                                                   total cost of the item.
.58 The depreciation charge for each period shall be recognised in        .48 The depreciation charge for each period shall be recognised           Paragraph similar.
    surplus or deficit unless it is included in the carrying amount of        in profit or loss unless it is included in the carrying amount of
    another asset.                                                            another asset.
.59 The depreciation charge for a period is usually recognised in         .49 The depreciation charge for a period is usually recognised in
    surplus or deficit. However, sometimes, the future economic               profit or loss. However, sometimes, the future economic               Terminology differences between GRAP 17 and IAS 16
    benefits or service potential embodied in an asset are                    benefits embodied in an asset are absorbed in producing               but principle similar - no affect on initial adoption of GRAP
    absorbed in producing other assets. In this case, the                     other assets. In this case, the depreciation charge constitutes       17.
    depreciation charge constitutes part of the cost of the other             part of the cost of the other asset and is included in its
    asset and is included in its carrying amount. For example, the            carrying amount. For example, the depreciation of
    depreciation of manufacturing plant and equipment is included             manufacturing plant and equipment is included in the costs of
    in the costs of conversion of inventories (see the Standard of            conversion of inventories (see IAS 2). Similarly, depreciation
    GRAP on Inventories). Similarly, depreciation of property, plant          of property, plant and equipment used for development
    and equipment used for development activities may be                      activities may be included in the cost of an intangible asset
    included in the cost of an intangible asset recognised in                 recognised in accordance with IAS 38 Intangible Assets.
    accordance with the Standard of GRAP on Intangible Assets.
Depreciable amount and depreciation period
.60 The depreciable amount of an asset shall be allocated on a            .50 The depreciable amount of an asset shall be allocated on a            Paragraph similar.
    systematic basis over its useful life.                                    systematic basis over its useful life.
.61 The residual value and the useful life of an asset shall be           .51 The residual value and the useful life of an asset shall be
    reviewed at least at each reporting date and, if expectations             reviewed at least at each financial year-end and, if                  Terminology differences between GRAP 17 and IAS 16
    differ from previous estimates, the change(s) shall be                    expectations differ from previous estimates, the change(s)            but principle is similar - no affect on initial adoption of
    accounted for as a change in an accounting estimate in                    shall be accounted for as a change in an accounting estimate          GRAP 17.
    accordance with the Standard of GRAP on Accounting Policies,              in accordance with IAS 8 Accounting Policies, Changes in
    Changes in Accounting Estimates and Errors.                               Accounting Estimates and Errors.
.62 Depreciation is recognised even if the fair value of the asset        .52 Depreciation is recognised even if the fair value of the asset        Paragraph similar.
    exceeds its carrying amount, as long as the asset’s residual              exceeds its carrying amount, as long as the asset’s residual
    value does not exceed its carrying amount. Repair and                     value does not exceed its carrying amount. Repair and
    maintenance of an asset do not negate the need to depreciate              maintenance of an asset do not negate the need to
    it.                                                                       depreciate it.
.63 The depreciable amount of an asset is determined after                .53 The depreciable amount of an asset is determined after                Paragraph similar.
    deducting its residual value. In practice, the residual value of          deducting its residual value. In practice, the residual value of
    an asset is often insignificant and therefore immaterial in the           an asset is often insignificant and therefore immaterial in the
    calculation of the depreciable amount.                                    calculation of the depreciable amount.
.64 The residual value of an asset may increase to an amount              .54 The residual value of an asset may increase to an amount              Paragraph similar.
    equal to or greater than the asset’s carrying amount. If it does,         equal to or greater than the asset’s carrying amount. If it
    the asset’s depreciation charge is zero unless and until its              does, the asset’s depreciation charge is zero unless and until
    residual value subsequently decreases to an amount below the              its residual value subsequently decreases to an amount
    asset’s carrying amount.                                                  below the asset’s carrying amount.
.65 Depreciation of an asset begins when it is available for use, i.e.    .55 Depreciation of an asset begins when it is available for use, ie
    when it is in the location and condition necessary for it to be           when it is in the location and condition necessary for it to be       Wording differences between GRAP 17 an IAS 16 will not
    capable of operating in the manner intended by management.                capable of operating in the manner intended by management.            affect the initial adoption of GRAP 17 as the principle in
    Depreciation of an asset ceases when the asset is                         Depreciation of an asset ceases at the earlier of the date that       the paragraph similar (GRAP 17 wording similar to IAS
    derecognised. Therefore, depreciation does not cease when                 the asset is classified as held for sale (or included in a            16).
    the asset becomes idle or is retired from active use and held for         disposal group that is classified as held for sale) in
    disposal unless the asset is fully depreciated. However, under            accordance with IFRS 5 and the date that the asset is
    usage methods of depreciation the depreciation charge can be              derecognised. Therefore, depreciation does not cease when
    zero while there is no production.                                        the asset becomes idle or is retired from active use unless the



Page 14 of 22
GRAP 17                                                                   IAS 16                                                                    DIFFERENCES
                                                                             asset is fully depreciated. However, under usage methods of
                                                                             depreciation the depreciation charge can be zero while there
                                                                             is no production.
.66 The future economic benefits or service potential embodied in         .56 The future economic benefits embodied in an asset are
    an asset are consumed by an entity principally through its use.          consumed by an entity principally through its use. However,
    However, other factors, such as technical or commercial                  other factors, such as technical or commercial obsolescence            Terminology differences between GRAP 17 and IAS 16
    obsolescence and wear and tear while an asset remains idle,              and wear and tear while an asset remains idle, often result in         but principle similar - no affect on initial adoption of GRAP
    often result in the diminution of the economic benefits or               the diminution of the economic benefits that might have been           17.
    service potential that might have been obtained from the asset.          obtained from the asset. Consequently, all the following
    Consequently, all the following factors are considered in                factors are considered in determining the useful life of an
    determining the useful life of an asset:                                 asset:

(a) expected usage of the asset. Usage is assessed by reference           (a) expected usage of the asset. Usage is assessed by reference
    to the asset’s expected capacity or physical output.                      to the asset’s expected capacity or physical output.

(b) expected physical wear and tear, which depends on operational         (b) expected physical wear and tear, which depends on
    factors such as the number of shifts for which the asset is to be        operational factors such as the number of shifts for which the
    used and the repair and maintenance programme, and the care              asset is to be used and the repair and maintenance
    and maintenance of the asset while idle.                                 programme, and the care and maintenance of the asset while
                                                                             idle.
(c) technical or commercial obsolescence arising from changes or
    improvements in production, or from a change in the market            (c) technical or commercial obsolescence arising from changes
    demand for the product or service output of the asset.                    or improvements in production, or from a change in the
                                                                              market demand for the product or service output of the asset.
(d) legal or similar limits on the use of the asset, such as the expiry
    dates of related leases.                                              (d) legal or similar limits on the use of the asset, such as the
                                                                              expiry dates of related leases.
.67 The useful life of an asset is defined in terms of the asset’s        .57 The useful life of an asset is defined in terms of the asset’s        Paragraph similar.
   expected utility to the entity. The asset management policy of             expected utility to the entity. The asset management policy of
   the entity may involve the disposal of assets after a specified            the entity may involve the disposal of assets after a specified
   time or after consumption of a specified proportion of the future          time or after consumption of a specified proportion of the
   economic benefits or service potential embodied in the asset.              future economic benefits embodied in the asset. Therefore,
   Therefore, the useful life of an asset may be shorter than its             the useful life of an asset may be shorter than its economic
   economic life. The estimation of the useful life of the asset is a         life. The estimation of the useful life of the asset is a matter of
   matter of judgement based on the experience of the entity with             judgement based on the experience of the entity with similar
   similar assets.                                                            assets.
.68 Land and buildings are separable assets and are accounted             .58 Land and buildings are separable assets and are accounted             Paragraph similar.
   separately, even when they are acquired together. With some                for separately, even when they are acquired together. With
   exceptions, such as quarries and sites used for landfill, land             some exceptions, such as quarries and sites used for landfill,
   has an unlimited useful life and therefore is not depreciated.             land has an unlimited useful life and therefore is not
   Buildings have a limited useful life and therefore are                     depreciated. Buildings have a limited useful life and therefore
   depreciable assets. An increase in the value of the land on                are depreciable assets. An increase in the value of the land
   which a building stands does not affect the determination of the           on which a building stands does not affect the determination
   depreciable amount of the building                                         of the depreciable amount of the building.
.69 If the cost of land includes the costs of site dismantlement,         .59 If the cost of land includes the costs of site dismantlement,
   removal and restoration, the portion of the land asset is                  removal and restoration, that portion of the land asset is            Paragraph similar.
   depreciated over the period of benefits or service potential               depreciated over the period of benefits obtained by incurring
   obtained by incurring those costs. In some cases, the land itself          those costs. In some cases, the land itself may have a limited
   may have a limited useful life, in which case it is depreciated in         useful life, in which case it is depreciated in a manner that
   a manner that reflects the benefits or service potential to be             reflects the benefits to be derived from it.
   derived from it.
Depreciation method


Page 15 of 22
GRAP 17                                                                IAS 16                                                                DIFFERENCES
.70 The depreciation method used shall reflect the pattern in which    .60 The depreciation method used shall reflect the pattern in         Terminology differences between GRAP 17 and IAS 16
    the asset’s future economic benefits or service potential are         which the asset’s future economic benefits are expected to be      but principle similar - no affect on initial adoption of GRAP
    expected to be consumed by the entity.                                consumed by the entity.                                            17.

.71 The depreciation method applied to an asset shall be reviewed      .61 The depreciation method applied to an asset shall be
    at least at each reporting date and, if there has been a              reviewed at least at each financial year-end and, if there has     Terminology differences between GRAP 17 and IAS 16
    significant change in the expected pattern of consumption of          been a significant change in the expected pattern of               but principle similar - no affect on initial adoption of GRAP
    the future economic benefits or service potential embodied in         consumption of the future economic benefits embodied in the        17.
    the asset, the method shall be changed to reflect the changed         asset, the method shall be changed to reflect the changed
    pattern. Such a change shall be accounted for as a change in          pattern. Such a change shall be accounted for as a change in
    an accounting estimate in accordance with Standard of GRAP            an accounting estimate in accordance with IAS 8.
    on Accounting Policies, Changes in Accounting Estimates and
    Errors.
.72 A variety of depreciation methods can be used to allocate the      .62 A variety of depreciation methods can be used to allocate the
    depreciable amount of an asset on a systematic basis over its          depreciable amount of an asset on a systematic basis over its     Terminology differences between GRAP 17 and IAS 16
    useful life. These methods include the straight-line method, the       useful life. These methods include the straight-line method,      but principle similar - no affect on initial adoption of GRAP
    diminishing balance method and the units of production                 the diminishing balance method and the units of production        17.
    method. Straight-line depreciation results in a constant charge        method. Straight-line depreciation results in a constant
    over the useful life if the asset’s residual value does not            charge over the useful life if the asset’s residual value does
    change. The diminishing balance method results in a                    not change. The diminishing balance method results in a
    decreasing charge over the useful life. The units of production        decreasing charge over the useful life. The units of production
    method results in a charge based on the expected use or                method results in a charge based on the expected use or
    output. The entity selects the method that most closely reflects       output. The entity selects the method that most closely
    the expected pattern of consumption of the future economic             reflects the expected pattern of consumption of the future
    benefits or service potential embodied in the asset. That              economic benefits embodied in the asset. That method is
    method is applied consistently from period to period unless            applied consistently from period to period unless there is a
    there is a change in the expected pattern of consumption of            change in the expected pattern of consumption of those
    those future economic benefits or service potential.                   future economic benefits.
Impairment
.73 To determine whether an item of property, plant and equipment      .63 To determine whether an item of property, plant and               Terminology differences between GRAP 17 and IAS 16
    is impaired, an entity applies the Standard of GRAP on                equipment is impaired, an entity applies IAS 36 Impairment of      but principle similar - no affect on initial adoption of GRAP
    Impairment of Assets. The Standard of GRAP on Impairment of           Assets. That Standard explains how an entity reviews the           17.
    Assets explains how an entity reviews the carrying amount of          carrying amount of its assets, how it determines the
    its assets, how it determines the recoverable amount or               recoverable amount of an asset, and when it recognises, or
    recoverable service amount of an asset and when it                    reverses the recognition of, an impairment loss.
    recognises, or reverses the recognition of, an impairment loss.
Compensation for impairment
.74 Compensation from third parties for items of property, plant       .65 Compensation from third parties for items of property, plant      Paragraph similar.
   and equipment that were impaired, lost or given up shall be            and equipment that were impaired, lost or given up shall be
   included in surplus or deficit when the compensation becomes           included in profit or loss when the compensation becomes
   receivable.                                                            receivable.
.75 Impairments or losses of items of property, plant and              .66 Impairments or losses of items of property, plant and
   equipment, related claims for or payments of compensation              equipment, related claims for or payments of compensation          Paragraph similar.
   from third parties and any subsequent purchase or construction         from third parties and any subsequent purchase or
   of replacement assets are separate economic events and are             construction of replacement assets are separate economic
   accounted for separately as follows:                                   events and are accounted for separately as follows:

(a) impairments of items of property, plant and equipment are          (a) impairments of items of property, plant and equipment are
    recognised in accordance with the Standard of GRAP on                  recognised in accordance with IAS 36;
    Impairment of Assets,
                                                                       (b) derecognition of items of property, plant and equipment
(b) derecognition of items of property, plant and equipment retired        retired or disposed of is determined in accordance with this


Page 16 of 22
GRAP 17                                                                   IAS 16                                                                  DIFFERENCES
   or disposed of is determined in accordance with this Standard,            Standard;

(c) compensation from third parties for items of property, plant and      (c) compensation from third parties for items of property, plant
    equipment that were impaired, lost, or given up is included in            and equipment that were impaired, lost or given up is               (c) – terminology differences but principle similar.
    determining surplus or deficit when it becomes receivable, and            included in determining profit or loss when it becomes
                                                                              receivable; and
(d) the cost of items of property, plant and equipment restored,
    purchased or constructed as replacements is determined in             (d) the cost of items of property, plant and equipment restored,
    accordance with this Standard.                                            purchased or constructed as replacements is determined in
                                                                              accordance with this Standard.
Derecognition
.76 The carrying amount of an item of property, plant and                 .67 The carrying amount of an item of property, plant and               Terminology differences between GRAP 17 and IAS 16
   equipment shall be derecognised:                                          equipment shall be derecognised:                                     but principle similar - no affect on initial adoption of GRAP
                                                                                                                                                  17.
(a) on disposal, or                                                       (a) on disposal; or

(b) when no future economic benefits or service potential are             (b) when no future economic benefits are expected from its use
    expected from its use or disposal.                                        or disposal.
.77 The gain or loss arising from the derecognition of an item of         .68 The gain or loss arising from the derecognition of an item of       Terminology differences between GRAP 17 and IAS 16
    property, plant and equipment shall be included in surplus or             property, plant and equipment shall be included in profit or        but principle similar - no affect on initial adoption of GRAP
    deficit when the item is derecognised (unless the Standard of             loss when the item is derecognised (unless IAS 17 requires          17.
    GRAP on Leases requires otherwise on a sale and leaseback).               otherwise on a sale and leaseback). Gains shall not be
    Gains shall not be classified as revenue.                                 classified as revenue.
.78 The disposal of an item of property, plant and equipment may          .69 The disposal of an item of property, plant and equipment may
    occur in a variety of ways (e.g. by sale, by entering into a              occur in a variety of ways (eg by sale, by entering into a          Paragraph similar.
    finance lease or by donation). In determining the date of                 finance lease or by donation). In determining the date of
    disposal of an item, an entity applies the criteria in the                disposal of an item, an entity applies the criteria in IAS 18
    Standard of GRAP on Revenue from Exchange Transactions,                   Revenue for recognising revenue from the sale of goods.
    for recognising revenue from the sale of goods. The Standard              IAS 17 applies to disposal by a sale and leaseback.
    of GRAP on Leases applies to disposal by a sale and
    leaseback.
.79 If, under the recognition principle in paragraph .11, an entity       .70 If, under the recognition principle in paragraph 7, an entity
    recognises in the carrying amount of an item of property, plant           recognises in the carrying amount of an item of property,           Paragraph similar.
    and equipment the cost of a replacement for part of the item,             plant and equipment the cost of a replacement for part of the
    then it derecognises the carrying amount of the replaced part             item, then it derecognises the carrying amount of the replaced
    regardless of whether the replaced part had been depreciated              part regardless of whether the replaced part had been
    separately. If it is not practicable for an entity to determine the       depreciated separately. If it is not practicable for an entity to
    carrying amount of the replaced part, it may use the cost of the          determine the carrying amount of the replaced part, it may
    replacement as an indication of what the cost of the replaced             use the cost of the replacement as an indication of what the
    part was at the time it was acquired or constructed.                      cost of the replaced part was at the time it was acquired or
                                                                              constructed.
.80 The gain or loss arising from the derecognition of an item of         .71 The gain or loss arising from the derecognition of an item of       Paragraph similar.
   property, plant and equipment shall be determined as the                   property, plant and equipment shall be determined as the
   difference between the net disposal proceeds, if any, and the              difference between the net disposal proceeds, if any, and the
   carrying amount of the item.                                               carrying amount of the item.
.81 The consideration receivable on disposal of an item of                .72 The consideration receivable on disposal of an item of
   property, plant and equipment is recognised initially at its fair          property, plant and equipment is recognised initially at its fair
   value. If payment for the item is deferred, the consideration              value. If payment for the item is deferred, the consideration       Paragraph similar.
   received is recognised initially at the cash price equivalent. The         received is recognised initially at the cash price equivalent.
   difference between the nominal amount of the consideration                 The difference between the nominal amount of the
   and the cash price equivalent is recognised as interest revenue            consideration and the cash price equivalent is recognised as
   in accordance with the Standard of GRAP on Revenue from                    interest revenue in accordance with IAS 18 reflecting the



Page 17 of 22
GRAP 17                                                                    IAS 16                                                                  DIFFERENCES
   Exchange Transactions reflecting the effective yield on the                effective yield on the receivable.
   receivable.
Disclosure
.82 The financial statements shall disclose, for each class of             .73 The financial statements shall disclose, for each class of          Wording differences between GRAP 17 and IAS 16 but
   property, plant and equipment recognised in the financial                  property, plant and equipment:                                       principle is similar - no affect on initial adoption of GRAP
   statements:                                                                                                                                     17.
                                                                           (a) the measurement bases used for determining the gross
(a) the measurement bases used for determining the gross                       carrying amount;                                                    GRAP 17.82 (a) to (d) and IAS 16.73 (a) to (d) – similar.
   carrying amount,
                                                                           (b ) the depreciation methods used;
(b) the depreciation methods used,
                                                                           (c) the useful lives or the depreciation rates used;
(c) the useful lives or the depreciation rates used,
                                                                           (d) the gross carrying amount and the accumulated depreciation
(d) the gross carrying amount and the accumulated depreciation                 (aggregated with accumulated impairment losses) at the
    (aggregated with accumulated impairment losses) at the                     beginning and end of the period; and
    beginning and end of the period, and
                                                                           (e) a reconciliation of the carrying amount at the beginning and
(e) a reconciliation of the carrying amount at the beginning and end             end of the period showing:                                        GRAP 17.82 (e) and IAS 16.73 (e) - terminology
      of the period showing:                                               (i) additions;                                                          differences between GRAP 17 and IAS 16 but disclosure
 (i) additions,                                                            (ii) assets classified as held for sale or included in a disposal       requirements are similar - no affect on initial adoption of
(ii) disposals,                                                                  group classified as held for sale in accordance with IFRS 5       GRAP 17.
(iii) acquisitions through business combinations,                                and other disposals;
(iv) increases or decreases resulting from revaluations under              (iii) acquisitions through business combinations;
      paragraphs .39, .49 and .50 and from impairment losses               (iv) increases or decreases resulting from revaluations under
      recognised or reversed directly in net assets under the                    paragraphs 31, 39 and 40 and from impairment losses
      Standard of GRAP on Impairment of Assets,                                  recognised or reversed directly in equity in accordance with
(v) impairment losses recognised in surplus or deficit in                        IAS 36;
      accordance with the Standard of GRAP on Impairment of                (v) impairment losses recognised in profit or loss in accordance
      Assets,                                                                    with IAS 36;
(vi) impairment losses reversed in surplus or deficit in accordance        (vi) impairment losses reversed in profit or loss in accordance
      with the Standard of GRAP on Impairment of Assets,                         with IAS 36;
(vii) depreciation,                                                        (vii) depreciation;
(viii) the net exchange differences arising on the translation of the      (viii)the net exchange differences arising on the translation of the
      financial statements from the functional currency into a different         financial statements from the functional currency into a
      presentation currency, including the translation of a foreign              different presentation currency, including the translation of a
      operation into the presentation currency of the reporting entity,          foreign operation into the presentation currency of the
      and                                                                        reporting entity; and
(ix) other changes.                                                        (ix) other changes.
.83 The financial statements shall also disclose for each class of         .74 The financial statements shall also disclose:                       Wording differences but disclosure requirements in GRAP
      property, plant and equipment recognised in the financial                                                                                    17 and IAS 16 similar – no affect on disclosures
      statements:                                                          (a) the existence and amounts of restrictions on title, and             requirements.
                                                                              property, plant and equipment pledged as security for
(a) the existence and amounts of restrictions on title, and property,         liabilities;                                                         (a) to (c) - similar
    plant and equipment pledged as securities for liabilities,
                                                                           (b) the amount of expenditures recognised in the carrying amount
(b) the amount of expenditures recognised in the carrying amount               of an item of property, plant and equipment in the course of
    of an item of property, plant and equipment in the course of its           its construction;
    construction,
                                                                           (c) the amount of contractual commitments for the acquisition of
(c) the amount of contractual commitments for the acquisition of               property, plant and equipment; and
    property, plant and equipment, and



Page 18 of 22
GRAP 17                                                                  IAS 16                                                                 DIFFERENCES
                                                                         (d) if it is not disclosed separately on the face of the income
(d) if it is not disclosed separately on the face of the statement of        statement, the amount of compensation from third parties for
    financial performance, the amount of compensation from third             items of property, plant and equipment that were impaired,         (d) – terminology differences but disclosure similar.
    parties for items of property, plant and equipment that were             lost or given up that is included in profit or loss.
    impaired, lost or given up that is included in surplus or deficit.
.84 Selection of the depreciation method and the estimation of the       .75 Selection of the depreciation method and estimation of the
    useful life of the assets are matters of judgment. Therefore,           useful life of assets are matters of judgement. Therefore,          Terminology differences between GRAP 17 and IAS 16
    disclosure of the methods adopted and the estimated useful              disclosure of the methods adopted and the estimated useful          but disclosure requirements similar.
    lives or depreciation rates provides users of financial                 lives or depreciation rates provides users of financial
    statements with information that allows them to review the              statements with information that allows them to review the
    policies selected by management and enables comparisons to              policies selected by management and enables comparisons
    be made with other entities. For similar reasons, it is necessary       to be made with other entities. For similar reasons, it is
    to disclose:                                                            necessary to disclose:

(a) depreciation, whether recognised in surplus or deficit or as part    (a) depreciation, whether recognised in profit or loss or as a part
    of the cost of other assets, during a period, and                        of the cost of other assets, during a period; and

(b) accumulated depreciation at the end of the period.                   (b) accumulated depreciation at the end of the period.
.85 In accordance with the Standard of GRAP on Accounting                .76 In accordance with IAS 8 an entity discloses the nature and
    Policies, Changes in Accounting Estimates and Errors an entity           effect of a change in an accounting estimate that has an           Disclosure similar.
    discloses the nature and effect of a change in an accounting             effect in the current period or is expected to have an effect in
    estimate that has an effect in the current period, or is expected        subsequent periods. For property, plant and equipment, such
    to have an effect in subsequent periods. For property, plant             disclosure may arise from changes in estimates with respect
    and equipment, such disclosure may arise from changes in                 to:
    estimates with respect to:
                                                                         (a) residual values;
(a) residual values,
                                                                         (b) the estimated costs of dismantling, removing or restoring
(b) the estimated costs of dismantling, removing or restoring items          items of property, plant and equipment;
    of property, plant and equipment,
                                                                         (c) useful lives; and
(c) useful lives, and
                                                                         (d) depreciation methods.
(d) depreciation methods.
.86 If items of property, plant and equipment are stated at revalued     .77 If items of property, plant and equipment are stated at
amounts, the following shall be disclosed:                                  revalued amounts, the following shall be disclosed:                 Disclosure similar.

(a) the effective date of the revaluation,                               (a) the effective date of the revaluation;

(b) whether an independent valuer was involved,                          (b) whether an independent valuer was involved;

(c) the methods and significant assumptions applied in estimating        (c) the methods and significant assumptions applied in estimating
the items’ fair values,                                                      the items’ fair values;

(d) the extent to which the items’ fair values were determined           (d) the extent to which the items’ fair values were determined
directly by reference to observable prices in an active market or            directly by reference to observable prices in an active market
recent market transactions on arm’s length terms or were                     or recent market transactions on arm’s length terms or were
estimated using other valuation techniques,                                  estimated using other valuation techniques;

(e) for each revalued class of property, plant and equipment, the        (e) for each revalued class of property, plant and equipment, the
carrying amount that would have been recognised had the assets               carrying amount that would have been recognised had the
been carried under the cost model, and                                       assets been carried under the cost model; and



Page 19 of 22
GRAP 17                                                                 IAS 16                                                               DIFFERENCES
(f) the revaluation surplus, indicating the change for the period and   (f) the revaluation surplus, indicating the change for the period
any restrictions on the distribution of the balance to owners of net         and any restrictions on the distribution of the balance to
assets.                                                                      shareholders.
.87 In accordance with the Standard of GRAP Impairment of               .78 In accordance with IAS 36 an entity discloses information on
     Assets an entity discloses information on impaired property,            impaired property, plant and equipment in addition to the
     plant and equipment in addition to the information required by          information required by paragraph 73(e)(iv)–(vi).
     paragraph .82(e)(iv) - (vi).
.88 Financial statements shall also disclose the following for each     .79 Users of financial statements may also find the following        Wording differences but disclosure requirements in
     class of property, plant and equipment:                               information relevant to their needs:                              GRAP 17 and IAS 16 similar. However, the disclosure
                                                                                                                                             requirement for temporarily idle, fully depreciated
(a) the carrying amount of temporarily idle property, plant and         (a) the carrying amount of temporarily idle property, plant and      property, plant and equipment and for property, plant
    equipment,                                                              equipment;                                                       and equipment that are retired from active use is
                                                                                                                                             required in GRAP 17 whereas IAS 16 only encourages
(b) the gross carrying amount of any fully depreciated property,        (b) the gross carrying amount of any fully depreciated property,     this disclosure.
    plant and equipment that is still in use, and                           plant and equipment that is still in use;

(c) the carrying amount of property, plant and equipment retired        (c) the carrying amount of property, plant and equipment retired
    from active use and held for disposal.                                  from active use and not classified as held for sale in
                                                                            accordance with IFRS 5; and

                                                                        (d) when the cost model is used, the fair value of property, plant   GRAP 17.89 vs IAS 16.79 (d) – similar disclosures.
                                                                            and equipment when this is materially different from the
                                                                            carrying amount.

                                                                        Therefore, entities are encouraged to disclose these amounts.
.89 When the cost model is used, financial statement users also
   find information relevant to the fair value of property, plant and                                                                        GRAP 17.89 vs IAS 16.79 (d) – similar disclosures.
   equipment when this is materially different from the carrying
   amount. Therefore, entities are encouraged to disclose these
   amounts.
Transitional Provisions                                                                                                                      Various paragraphs were amended and additional
                                                                                                                                             guidance included during IASB improvements project but
                                                                                                                                             neither IPSAS nor IAS included additional or amended
                                                                                                                                             current transitional provisions to address these
                                                                                                                                             amendments.
.90 All provisions of this Standard shall be applied to property,       .80 The requirements of paragraphs 24–26 regarding the initial
   plant and equipment held on or after the effective date of this         measurement of an item of property, plant and equipment
   Standard.                                                               acquired in an exchange of assets transaction shall be
                                                                           applied prospectively only to future transactions.
Initial adoption of accrual accounting                                                                                                       Transitional provisions in paragraphs .91 to .93 not
                                                                                                                                             applicable to public entities.
.91 Where, on adoption of the accrual basis of accounting, an
   entity initially recognises property, plant and equipment on
   adoption of this Standard, the entity shall report the effect of
   the initial recognition of property, plant and equipment as an
   adjustment to the opening balance of accumulated surpluses or
   deficits for the period in which the Standard is first adopted.

.92 An entity that adopts accrual accounting in accordance with
   Standards of GRAP shall initially recognise property, plant and
   equipment at cost or fair value. For property, plant and
   equipment that were acquired at no cost, or for a nominal cost,



Page 20 of 22
GRAP 17                                                                  IAS 16   DIFFERENCES
   cost is the property, plant and equipment’s fair value as at the
   date of adoption of this Standard.

.93 When adopting this Standard, an entity may control property,
   plant and equipment that it has not previously recognised. This
   Standard allows entities to initially recognise property, plant
   and equipment at cost or fair value. Where the property, plant
   and equipment are initially recognised at cost and were
   acquired at no cost, or for a nominal cost, cost will be
   determined by reference to the property, plant and equipment’s
   fair value as at the date of adoption of this Standard. Where the
   cost of acquisition of the property, plant and equipment is not
   known, its cost may be estimated by reference to its fair value
   as at the date of adoption of this Standard.
Initial adoption of Standard by entities applying                                 GRAP require retrospective application where accounting
                                                                                  policy has changed on initial adoption of GRAP 17 that is
accrual accounting                                                                in line with the Board’s agreed principle.

                                                                                  A directive containing transitional provisions was issued
                                                                                  for comment – the proposed transitional provisions
                                                                                  require retrospective for application of GRAP 17 on initial
                                                                                  adoption.

.94 Prior to initial adoption of this Standard an entity may recognise
    its property, plant and equipment on a basis other than the cost
    model or the revaluation model. The Standard of GRAP on
    Accounting Policies, Changes in Accounting Estimates and
    Errors applies to any change in accounting policies that occurs
    when an entity implements this Standard. The effect of the
    change in accounting policies includes the reclassification of
    any amount held in the revaluation surplus for property, plant
    and equipment.
Land held for currently undetermined use                                          Additional implementation guidance might be required to
                                                                                  ensure that the transitional provisions in paragraph .95 to
                                                                                  .97 are correctly applied.
.95 On first time adoption of this Standard, land held for a currently
    undetermined use shall be recognised in accordance with the
    requirements of the Standard of GRAP on Investment Property
    until such time as the use of the land has been determined.
.96 When an entity first adopts this Standard, the entity may
    control land for which the intended use has not been
    determined. For example, an entity has acquired land at no
    cost and on first time adoption of this Standard, the intended
    use of the land has not been determined. Until such time as the
    land meets the recognition criteria for property, plant and
    equipment as determined in paragraph .11, the land should be
    recognised in accordance with the requirements of the
    Standard of GRAP on Investment Property.
.97 When an entity takes advantage of the transitional provision in
    paragraph .95, that fact shall be disclosed. When the entity has
    obtained certainty regarding the use of the land, details of any
    transfers shall be disclosed.



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GRAP 17                                                                IAS 16                                                             DIFFERENCES
Effective date
.98 An entity shall apply this Standard of GRAP for annual financial   .81 An entity shall apply this Standard for annual periods
    statements covering periods beginning on or after a date to be        beginning on or after 1 January 2005. Earlier application is    Standard paragraph in Standards of GRAP.
    determined by the Minister of Finance in a regulation to be           encouraged. If an entity applies this Standard for a period
    published in accordance with section 91(1)(b) of the Public           beginning before 1 January 2005, it shall disclose that fact.
    Finance Management Act, Act No. 1 of 1999, as amended.             .81A An entity shall apply the amendments in paragraph 3 for
                                                                          annual periods beginning on or after 1 January 2006. If an
                                                                          entity applies IFRS 6 Exploration for and Evaluation of
                                                                          Mineral Resources for an earlier period, those amendments
                                                                          shall be applied for that earlier period.
Withdrawal of pronouncements
.99 When this Standard becomes effective for annual financial          .82 This Standard supersedes IAS 16 Property, Plant and
   statements covering periods beginning on or after (date to be          Equipment (revised in 1998).
   determined by the Minister of Finance), the Standard will           83 This Standard supersedes the following Interpretations:         Withdrawal of GAMAP Standard.
   supersede the Standard of Generally Accepted Municipal
   Accounting Practice on Property, Plant and Equipment issued         (a) SIC-6 Costs of Modifying Existing Software;
   in May 2004.
                                                                       (b) SIC-14 Property, Plant and Equipment—Compensation for
                                                                           the Impairment or Loss of Items; and

                                                                       (c)SIC-23 Property, Plant and Equipment—Major Inspection or
                                                                           Overhaul Costs.




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