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IFRS Guide > IAS 16

The International Accounting Standards Committee (IASC) released International Accounting Standard 16 (IAS 16) to address the topic of property, plant, and equipment. As these items are usually a significant aspect of the balance sheet of an entity, any potential change in the treatment of these can have large affects on the company.

Primarily, the main focus areas of this standard are three-fold. The first is to specify what can be classified as PP&E. After these criteria have been met, it must be decided at what value they are held at. Finally, this standard addresses the charges against property, plant, and equipment which includes such items as depreciation and impairment.

IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.

Check out more high level explanations of the IASB IFRS in our Guide to IFRS International Financial Reporting Standards!