◦ (a) The prior period's closing balances have been correctly brought forward to the current period or, when appropriate, have been restated; and ◦ (b) Appropriate accounting policies are consistently applied or changes in accounting policies have been properly accounted for and adequately disclosed.

The prior year’s balances were audited by another auditor who has issued (type of opinion) on (date of report). The prior year’s balances are only presented for comparative purposes but never part of the current year’s balances. … still unqualified opinion but modified to recognize the division of responsibility between the predecessor auditor and the successor auditor (to be reported by the other group)

An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost PAS 16 contains the principles for initial recognition of property, plant and equipment. Cost is determined by reference to the cash paid, cash equivalent price in case of deferred payment acquisition, or fair value of the what is given up by the acquirer in case of exchange.

(Note 2: Summary of Significant Policies) Purchase price, including import duties and non- refundable purchase taxes, after deducting trade discounts and rebates; Costs directly attributable to bringing the asset to the location and condition for use intended by the management; Initial estimate of dismantling costs and removal and restoring the site on which the asset is located.

PAS 16 specifies three components of costs, namely (1) purchase price, (2) directly attributable costs, and (3) initial estimate of dismantling and removing the item or restoring the site on which it is located (otherwise known as decommissioning costs).

 Employee benefits arising directly from the construction or acquisition of the item of PPE  Site preparations  Initial delivery and handling costs  Installation and assembly costs  Costs of testing whether the asset is functioning properly after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition  Professional fees

1. Administration and general overheads 2. Abnormal costs 3. Costs incurred after the asset is physically ready for use

The costs of day to day servicing an item of PPE are charged to profit or loss (Repairs and Maintenance). The costs of day-to-day servicing of the item of PPE include the costs of labor, consumables and cost of small parts. They are charged to Repairs and Maintenance Expense or a similar expense account.

 Regular major inspections costs for faults shall be capitalized if the recognition criteria are met. Any remaining carrying amount of the cost of the previous inspection shall be derecognized.  Cost of parts that require replacement at regular intervals are capitalized, provided the recognition criteria are met. The carrying amount of the part that is replaced is derecognized.

 Cost model or  Revaluation model, and shall apply said accounting policy to an entire class of PPE

PPE is valued and presented at cost less accumulated depreciation and any accumulated impairment loss … in the accounting policy to be disclosed, net book value has never been mentioned

An item of PPE, whose fair value can be determined reliably, shall be carried at revalued amount, being its fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent impairment losses.

The revalued amount is based on the following: a. Market-based evidence by appraisal b. Depreciated replacement cost

Cost Replacement Difference Cost Historical Replacement Appreciation AD AD on HC AD on RC AD on Appr BV BV/CA Sound Value Rev Surplus HC – Historical Cost BV – Book Value CA – Carrying Amount AD – Accumulated Depreciation RC – Replacement Cost

 Proportional restatement  Elimination Under the proportional restatement, both the gross value of the asset and accumulated depreciation are restated proportionately to the revalued amount. After the revaluation entry, the excess of the asset balance over the balance of the accumulated depreciation is equal to the revalued amount. Under the elimination method, the balance of the accumulated depreciation before revaluation is closed to the asset account (eliminating the accumulated depreciation) and then the revaluation entry increases the asset account to its revalued amount. Thus, after the revaluation, the asset account balance is exactly equal to the revalued amount.

 Initial Revaluation - the increase shall be credited directly to equity,Revaluation Surplus  Subsequent Revaluation - the increase shall be recognized in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss, Revaluation Gain, (with a ceiling), then any excess to Revaluation Surplus

 Initial Revaluation - the decrease shall be recognized in profit or loss, Revaluation Loss  Subsequent Revaluation - the decrease shall be debited directly to equity to the extent of any credit balance existing in the revaluation surplus in respect of that asset, Revaluation Surplus (until exhausted), then to Revaluation Loss in the profit and loss statement

 Where ◦ The recoverable amount is less than the asset’s CV, the asset is impaired. ◦ The carrying value shall be reduced to the recoverable amount. ◦ This reduction is called impairment loss.

 External sources ◦ Decline in market value ◦ Increase in market interest rate ◦ Carrying value of the net assets > stock market value ◦ Legal, technological changes  Internal sources ◦ Physical damage ◦ Obsolescence ◦ Decline in entity’s performance ◦ Decline in cash flows generated by the asset.

 The asset’s recoverable amount is the higher between ◦ The asset’s net selling price ◦ The asset’s value in use The net selling price is the asset’s fair value less cost to sell. The value in use is the present value of the net cash flow from the use and disposal of the asset.

The carrying amount of an item of PPE shall be derecognized: a. On disposal; or b. When no future economic benefits are expected from its use or disposal

 Measurement bases  Depreciation methods  Useful lives or depreciation rates  Gross carrying amount and accumulated depreciation at beginning and end of the period... explanatory information under the individual (lapsing)) schedule

 Reconciliation of beginning and ending carrying amount showing additions, disposals, acquisitions, revaluations, impairment losses and reversals of impairment losses, depreciation and other changes

 Restrictions on titles  Amount recognized in carrying amounts for items in the course of construction  Amount of contractual commitments for acquisition of PPE  Amount of compensation to third parties for items of PPE that were impaired, lost or given up that is included in P&L

 Effective date of revaluation  Whether an independent valuer was involved  Methods and assumptions applied in estimating fair values  For each revalued class of PPE, the carrying amount using the cost model  Revaluation surplus, indicating the change for the period and any restrictions on the distribution to shareholders.