hi there,
If a company purchases an item(s) of plant that is/are used to generate a product which is the company's chief source of revenue, the company would normally classify these items as 'property, plant and equipment' - IAS 16. However, if the company plans to use the item for a certain period of time (say 50 Years or more) and then sell it, does this mean the company must classify the plant as an investment property on purchase? Or would it be correct to classify the plant as 'PPE' on initial recognition and reclassify to investment property as soon as use of the property ceases.
PS. A buyer for the plant has already been found with regards to sale of the plant after 50 or more years.
Any advice would be greatly appreciated.
Thank you.
If a company purchases an item(s) of plant that is/are used to generate a product which is the company's chief source of revenue, the company would normally classify these items as 'property, plant and equipment' - IAS 16. However, if the company plans to use the item for a certain period of time (say 50 Years or more) and then sell it, does this mean the company must classify the plant as an investment property on purchase? Or would it be correct to classify the plant as 'PPE' on initial recognition and reclassify to investment property as soon as use of the property ceases.
PS. A buyer for the plant has already been found with regards to sale of the plant after 50 or more years.
Any advice would be greatly appreciated.
Thank you.
