 Hello, and welcome to this session. This is Professor Farhad, and this session we're going to be looking at IAS 16, which deals with property, plant, and equipment. This topic is covered in an international accounting course, as well as the CPA exam. Yes, this topic is covered on the exam. Before I start, I would always like to remind my viewers to connect with me on a professional level via LinkedIn account. If you don't have a LinkedIn account, I strongly suggest you create one. It's very important for your professional image and network ability. YouTube is where I house all my lectures. If you haven't subscribed to my YouTube, please do so. Please like my lectures if you like them, put them in playlist, share them, let the world know about them. If you're benefiting from my lectures, there's somebody else might benefit as well. Please share the wealth. This is my Instagram account. I'm trying to grow my Instagram account. Please follow me on Instagram. This is my Facebook page. I do have some premium account on Gumroad, and this is my website. Let's go ahead and talk about IAS-16, Property, Plant, and Equipment. So this standard was adopted in 1993, although many of its central statements, provisions, had been part of the IAS since the 1970s. So nothing have changed since the 70s, but it was formally adopted. So IAS-16 covers the following accounting when it comes to fixed asset, and this is what we're gonna be looking at. Recognition of initial cost of property, plant, and equipment. Basically when we initially buy the asset, how do we record the asset initially? Recognition of subsequent cost. Well, when we incur additional costs, how do we have to deal with that? Measurement at initial recognition. What dollar amount do we state the asset at the initial recognition? Measurement after initial recognition, and this is gonna be very interesting, because as far as US GAAP, we don't, practically we don't have anything to deal with after initial recognition, except if we had to do impairment, but otherwise we don't have to worry about it. We depreciation as well as the recognition. What's the recognition is when you sell or retire the asset or exchange it, something to that effect. So those are the topics, the main topics that IAS-16 deal with. So let's start with recognition of initial cost. What does the cost include? Obviously the cost would include what you're gonna pay for this asset, the purchase price. The purchase price would include import duties and any taxes you have to pay. For example, if you wanted to buy a car, let's assume you wanted to buy a car from Germany. Well, it's a Mercedes. You have to pay $60,000 for the Mercedes. Then to bring it to the US, you might have to pay a $5,000 in import duties. Who knows? It might be more if the president imposed tariffs. Then you might have to pay certain taxes, maybe taxes on the vehicle in your state to register that vehicle. So all of those are part of your cost, okay? So practically all costs needed for an asset to perform as intended. So what, so any cost you need to incur to get this asset ready for its intended use, whatever their intended use is, transportation, insurance, well and transit, any cost you have to include as part of your cost. Also you have to do, if you have any dismantling cost, estimate the cost of dismantling and removing the asset along with restoring the site. So you're gonna be building an asset, okay? And after 10 to 15 years, you have to remove this asset, okay? You have to remove the building and restore the land by law to its original, maybe plant some trees, whatever the, or plant grass, whatever the original condition of the land. Well, guess what? You have to estimate the cost of dismantling and removing the asset along with the restoration site, okay? If you exchange an asset, if you exchange an asset, the fair value is used unless no commercial substance or fair value cannot be determined. Now, I am not going to cover the exchange of assets here in details because this course is basically an overview. But if you're interested in looking a little bit more about when two assets are exchanged, whether there's a commercial substance, no commercial substance, fair value is known or unknown, go to my intermediate accounting lessons. Just wanna let you know that sometime you can acquire an asset through an exchange and simply put what I'm gonna tell you here, you would record this asset based on the fair value of the asset that you gave up. Unless it lacks commercial substance, you have to deal with a different rule or the fair value cannot be determined. Under those circumstances, you would have to use the book value to record the initial recognition of the asset. Okay, that's all what I'm gonna say about this. Well, let's take a look at an example just to see how this all fits together. T-Corporation construct a powder coating facility at a cost of three million, one million for the building and two million for the machinery and equipment. So there's three million dollar cost, one million is gonna be allocated at the building, two million for the machinery. Local law requires the company to dismantle and remove the plant at the end of its useful life. So notice here we have an additional requirement because once you are done with that powder coating facility, you have to dismantle and remove the building. Now what's gonna happen, the company will have to estimate the net cost of removal of the equipment after the duct and salvage value. It will be 100,000 and the net cost for dismantling and removing the building will be 400,000. So with the equipment, it's gonna cost them 100,000 to remove it and the building, it's gonna cost them 400,000 to remove it. Okay, the useful life of this facility is 20 years. Now they don't have to worry about this $100,000 or this $400,000 until 20 years later. Why? Because they're gonna estimate how much they have to incur 20 years later. They're gonna be using a discount rate of 10%. Now, if you don't know how to do present value computation, if you don't know how to do present value or discounting, if you don't know this concept because we're gonna be working with this by all means, go to my intermediate accounting chapter six. I have a detailed explanation from A to Z about the present value. Otherwise here, I'm gonna assume you know how to deal with present value, okay? So how do we record this asset which is the building and the machinery initially, okay? So the initial costs of the machinery and equipment must include the estimated dismantling and removal cost discounted to the present value. Well, the 100,000, we don't have to kind of record it as 100,000 because we don't have to pay it today. We have to pay it 20 years from now. The 400,000, the same concept. So it's additional costs that we have to incur, but fortunately, we don't have to come up with that money until 20 years later. And we are assuming a 10% rate. What does that mean? It means for the construction cost of the building, for the construction cost, it's gonna be a million dollar. So our cost will be a million dollar. Oops, it will be, let me erase this. The construction cost for the building will be a million dollar, what we paid today, plus the present value of 100, yeah, actually for the building is 400, plus the present value of $400,000. This will be the cost of the building, the building. For the machinery, it will be two million plus the present value of the 100,000. So this is how we come up with the cost of each. So the construction cost of the building is a million dollar, plus the present value of the spendling and removing, which it's gonna cost us 400,000, discounted at the present value factor, 0.14864. Once again, if you don't know what's going on here, go to my intermediate accounting chapter six. So the present value is 59,457. Therefore, the building will be debited. We add the building at a million, 59,457. The same concept would apply to the machinery and equipment. The cost is two million plus the present value of the spendling, which is we have to come up with $100,000, but 20 years from now. Therefore, we have to account for 14,864. Therefore, the cost of the machine is 2,014,864. So notice those two numbers, I'm gonna highlight them in yellow. Those two numbers here, the 59,457 and the 14,864, those are future liability, okay? And when you have a liability, you have to incur expenses, interest expense, right? But now you have to record the liability. Let's take a look at the entry. The entry will be debit the building, 1,059,000, debit the machinery, 2,014,864, credit cash, the only cash we're coming up with today is 3 million in provision for dismantling and removing, which is a liability of 74,000. Now, what's gonna happen is this, from now till 20 years from now, this liability will incur interest. So every year of starting with year one, year 174,321, this is the liability. This liability would incur interest at 10%. And that's 7,432 dollars and 10 cents. What's gonna happen? This amount will be added to the liability and it will be an interest expense. Then the liability for the following year will be this number, which is 74,321 plus 7,432 dollars and 10 cents. This will be our new liability. Then we multiply it by 10%. We debit interest expense, credit provision for dismantling and removing. And after 20 years, this account here will be half a million, which is 100,000 and 400,000. If you'd like to try it, you can try it. For 20 years, just to kind of go over the computation to prove it to yourself, okay? Measurement subsequent to initial recognition. So we looked at the asset, we looked at the initial recognition. Now we're gonna be looking at subsequent recognition, subsequent recognition. So the IFRS, which is in contrast to USGAP, allows two treatment. And this is a major issue between USGAP and IFRS. The first method is the cost method, which is just you record it at cost and you depreciate the asset. The second method is revaluation method. And this is not acceptable under USGAP. USGAP does not use the revaluation method. So you have to do the fair value date of the revaluation minus subsequent depreciation. What you have to do is you have to revalue, at fair value, your assets, okay? Must revalue entire class of assets. So when you do this revaluation, it applies to the entire class. You cannot select. What is an entire class? You might have land, land and building, machinery, office equipment, furniture and fixture, motor vehicle, ships and aircraft. Those are different classes. You must also provide detailed disclosure for each class. Whether you revalue it or not, you still have to provide the detail. And you must, you might have to revalue often, okay? Now this is important. The increase in value go to other comprehensive income. So let's assume you have a piece of land or piece of equipment and a building. It went up in value. The increase in value goes into OCI. Then the decrease reduces OCI. So let's assume you bought a building for 100,000. The value went up, goes into OCI. Then if the value goes down, it goes down from OCI until you reach 100,000. Once it falls below, once it falls below 100,000, 100,000 is cost, it becomes an expense. Then it becomes an expense. So the 100,000 basically is your line. Any accounting that's done above the 100,000, any increase or decrease it's into OCI. And once the revaluation falls below 100,000, which is below the original cost, then it's considered an expense. It hits the income statement. The revaluation surplus may be transferred to retained earning at the disposal of the asset. So once you are done with the asset, if there's any revaluation, you can close it to retained earning, whether it's a loss or a gain. Revalued asset must be presented either at the gross amount, less separately reported accumulated depreciation, or at net amount. So you could either show the asset minus depreciation, or you could just show the net amount. You can show the net amount. Fair value and frequency of revaluation. So how do you determine the fair value? How the fair value is determined? And that's a lot of work. And how often do you have to do so? Well, the first of all, what is the fair value of an asset? Well, the fair value is how much you can get for this asset on that date between willing parties and an arm length transaction. So the fair value is how much can you sell this asset for to somebody, to an outsider, to somebody that you're not related, you're related to, they're willing to pay for it. This is what the fair value is. And the fair value of the asset at the date of the revaluation. So when you do this revaluation, how much it's worth. Now, if you have a land and building, you have to maybe hire a qualified appraiser. They will appraise it for you. Land and building. If you have plant and equipment, it's also determined also through some sort of appraisal. If you have plant and equipment. Now, sometimes you might have very specialized equipment that's very unique to your business, very unique to your industry. Nobody has a similar asset, which is it's very common in manufacturing. Then what you have to do, you have to use a depreciated cost, cost, depreciated replacement cost approach. So you just have to look at it from a book perspective, how much it lost depreciation. And if you wanna recover that depreciation, buy a new asset, how much would it cost you, okay? If you wanna kind of replace that depreciation. But most of the time, you could always find the fair value. Even the fair value is difficult to obtain and costly to obtain in time consuming. Think about if a company is revaluing its property, plant and equipment every year. That's a lot of work. A lot of work for appraisers as well. Appraisers would love you because every time they do this, they're gonna charge you, they're gonna charge you money for it. But it's not feasible, okay? In my opinion, I'm US gap biased. Revalue amount should not differ materially from the fair value at the balance she did. So when you revalue it, it should be closer to the fair value, okay? What's that gonna do? It's gonna basically push you to keep revaluing your asset because you wanna keep it at fair value, okay? Now, although IASB avoids annual revaluation, in some circumstances, they will be necessary to comply with the standard. Because remember, the standard says when you list that asset, if you chose the revaluation, it has to reflect fair value. Therefore, you might have to do it every year. In some cases, the fair value doesn't change a lot from year to year. Then you could only do the revaluation every several years. But remember, once you open that Pandora box and you decided to revalue your asset, you're gonna have to do it on a regular basis. Maybe yearly, maybe not, depending on the change in that asset. So what happened to accumulated depreciation when you revalue the asset? What do you have to do? Because once the asset is revalued, maybe you bought it at 100,000 and it's at 130 or maybe down at 70. So what do you have to do with the depreciation? Well, you have two options. You can restate the accumulated depreciation proportionally with the change in the gross amount of the asset. So what's gonna happen? The gross amount of the asset, the asset will change, the gross carrying amount of the asset. If your book value is changing, then you have to change the depreciation proportionally so that the carrying amount of the asset after the revaluation equal to the revalued amount. So basically what you have to do, you have to say, well, if my carrying amount is changing, well, I have to change my accumulated depreciation proportionally, okay? So the standard comment that this method is often used where the asset revalued by the mean of an index and is appropriate method for those companies using current cost accounting. So this method is appropriate when you're using current cost accounting. The other way to do it is to eliminate the accumulated depreciation against the gross carrying amount of the asset and restate the net amount of the revalued amount of the asset. What are we talking about here? Well, the best way to kind of show you both method, you could read them, is to work an example. That's the only way to show you how alternative one versus alternative two, how would that work? So let's take a look at an example. Let's assume K company has a building with a cost of a million, accumulated depreciation of 600,000, book value or carrying value equal to 400,000, which is a million minus 600, as of December 31st, year one. So this is where we stand. So on this date, the company determined that the fair value for this building is 750. Hold on a second. I have an asset on the books. This is the book value is 400,000. And when you're telling me is my value should be 750. What does that mean? It means I have to write up my asset 350,000. So the company wishes to carry the building at the revalued amount and the revalued amount is 750. So let's take a look at treatment one. Okay, let's go. Let's look at treatment one more time. So you have to restate the accumulated depreciation proportionally with the change in the gross carrying amount of the asset so that the carrying amount, the book value of the asset after the valuation equal to the revalued amount. So let's take a look at what we are talking about here. Okay, under alternative one, company K would restate both the building and accumulated depreciation such as the ratio of net the carrying amount is 40%. Now why 40%? Because the value, the book value is 400,000 divided by the original cost is 40%. So the book value is 40%. Now the carrying value is 750. Now the new value is 750. What does that mean? It means to find my new in quote cost. Okay, my new cost. I'm gonna have to take 750 divided by 40%. Let's do this. I'm gonna take 750 divided by 0.4. So my asset, the new value of my asset, it was a million dollar at the original cost. Now I should consider my asset at 1,875,000. Okay, and the book value should be 40% of this. Well, again, doing the same thing, the book value is 40%, which means it's 750. Well, if my asset should have a cost of 1,750, and book value of 750, well, can I find my accumulated depreciation? Sure, I can find it. Remember, cost minus accumulated depreciation equal to the book value. So accumulated depreciation will be 1,125. Let's take a look at this. So this is the original information cost, gross amount, gross carrying amount minus accumulated depreciation equal to the book value. Then we said the gross carrying amount goes to from a million to 1,875. Now, how did I figure this number out? Well, I said the new book value should be, the new carrying amount should be 750. And 750 should be 40% of the carrying amounts. I took 750 divided by 40%. So my new carrying amount should be 1,875. And my new book value is gonna go from 400,000 to 750. This is the fair value. I have to list it at fair values. I have to have an increase of 350. Well, I have to increase of 350 to go from a million to 1,875. I have to have 875 and my accumulated depreciation will have to increase by 525 because I need a fair value of 750. So basically taking this information, I can book an entry, I can debit my building, 875, credit accumulated depreciation, increase accumulated depreciation by 525. And now I have a revaluation surplus of 350. So that's the entry to accomplish this. So let's take a look at the second alternative treatment, okay? Let's take a look at the rule first before we look at it. Eliminate the accumulated depreciation against the gross carrying amount of the asset, then restate the net amount to revalued amount of the asset. So first, remove the all depreciation against the gross amount. So the all depreciation is 600,000. I'm gonna debit accumulated depreciation, reduce accumulated depreciation 600,000. And I'm gonna do it against the carrying amount of the building. So I removed the depreciation and accumulated depreciation, the old one, and removed the building, again, removed against the building. Then I'm gonna restate, then it says, then the building account is increased by 350. I have to increase now my building by 350 and I'm gonna have to book a revaluation surplus. Then I increase my building by 350. So notice as a result of these two entries, the building account has a carrying value of 750. The original value is a million. I remove 600,000 in the first entry. Then I added, then I added 350. Then I added 350. Okay? So as a result, the carrying amount is 750 under both scenarios. So those are the two alternatives. That's how you have to deal with depreciation. Okay? So what's gonna happen is when we have that revaluation in year one, that's pretty straightforward. But what happened when you have revaluation subsequent to year one? So you have an asset, you value it up, year one, then in year two, it went down. Well, how far did it go down? Did it go down to the original cost or did it fall below the cost? Or you had an asset and it went down below the cost, then it went up above cost. So how do you have to do in subsequent year? So year one is pretty straightforward. On the first evaluation, after the initial recording, the treatment of increases and decreases and the carrying amount is pretty straightforward. And that is increase are credited directly to the very revaluation surplus. So any increase goes into OCI, which is part of equity. Any decrease in year one goes as to the income statement. So year one, it means basically you have an asset, you have the cost, and here's what happened. If you have to revalue it down in year one, that's an expense. If you have to revalue it up, it's an OCI. That's year one. Now what happened in year two? Well, year two, maybe your asset went up here, maybe your asset is down here. But what do you have to do after year two? Well, I believe it's still pretty straightforward, in my opinion. To the extent that the previous revaluation surplus, to the extent that there is a previous revaluation surplus with respect to an asset, a decrease should be charged against it first that any excess of deficit over the previous surplus should be expensed. In simple English, you have the cost here. In year one, you revalued asset right here. Year one. So as long as the asset value is in this area, above the cost, you are still dealing with OCI. That's what we're saying. If the revaluation falls below the cost, if it happens to fall here, then this amount will be OCI, and this amount will be expense. To the extent that the previous revaluation resulted in a charge to an expense, a subsequent upward revaluation first should be recognized as income to the extent of the previous expense and any access should be credited to the other comprehensive income. AKA, let's do it in simple example. This is my cost. In year one, I went below my cost. When I went below my cost, it was an expense. Now I went from this expense, I went down 10,000. Then I went up only 5,000. Well, as long as I'm dealing below cost, this is gonna be an income of 5,000. But let's assume I went from negative 10,000, negative 10,000 to positive 3,000. Now positive 3,000. Well, guess what? I have 10,000 of income and 3,000 goes into OCI. So again, the same concept. Any time you are dealing below the line and the line is cost, any time you are dealing below the line, you are dealing in OCI. I'm sorry, below the line, at below cost you are dealing with expenses and income. If it went up, it's an income. If it kept on deteriorating, it's an expense. Once that value goes above cost, then you are dealing with OCI. That's basically it. And the best way to look at this is to actually work an example to see how this works. So we have three assets, a land, a building, a building, and a machinery. So we're gonna work each one of them separately. Let's start with land. Land, it had a cost of 100,000. It went up to 120, then it went up to 150. So we bought it, the cost is 100. It went up to 120, it went up to 150. So it went up, then it went up again. So let's take a look at the journal entry. The first year we debit land at 20, then we credit revaluation surplus up and up. Revaluation surplus, remember, it's an OCI account because it's above the cost. Year two, again, we debit land 30,000. We debit revaluation surplus. Again, we're dealing above 100,000. Pretty straightforward. The building went down from 500 to 450. Then in year two went from 450 to 460. So it fell below the cost year one. Then year two it recovered, but it's still below the cost. So let's take a look at what we do now. We debit loss on revaluation, which is an expense 50,000. And this is year one. Then we credit the building 50,000. In year two, we're still at a loss, but we recover 10,000. We debit the building 10,000. And we credit revaluation surplus, which is an income account 10,000. Why? Because we are dealing below 500 million. Machinery went from 200 to 210, which is good, went up in value, then went from 210 to 185. Then in the following year, it dropped below the original cost. So year one is pretty straightforward. I bring the asset up 10,000, and I bring my revaluation surplus up 10,000. In year two, what happened is this. So this is what we are dealing with here. This was the line. So year one, I was up here 210. If I'm up here, I'm dealing with OCI. So I booked this into OCI. Year two, sorry, year two, I went from 200,000 to 185. So now I'm gonna have to remove my OCI. I have to debit my OCI, my revaluation surplus, reduce my building, my machinery by 25, and book an expense by 15. So this is the 15, it's an expense. And this is the 10 is OCI. This is the 10,000. So this is OCI, and this is an expense. So what happened to revaluation surplus account? Remember, the revaluation surplus are an equity. Well, revaluation surplus and equity might be transferred to retained earning when the surplus is realized. What does it realize? It means we stop using the asset. When do we stop using the asset? We either sold it, exchange it, or simply stop using it. Realized either through the use of the asset or upon its sale or disposal. The revaluation surplus and equity may be transferred in one of two ways to retained earning. So we may go through a lump sum at the time of the asset sold us or scrapped, just take it out, or within each period an amount equal to the difference between the depreciation on the revalued amount and the depreciation on the historical amount of the asset might be transferred in retained earnings. So we do it in pieces or we might do it all in lump sum when we sell the asset. And guess what? The third possibility that's allowed by IFRS is do nothing with the surplus, with the revaluation surplus. And I'm assuming this third option is do nothing is because sometimes you're gonna have gains, you're gonna have losses. They basically offset each other over the long term. It may not be true. It may not be true. Let's talk about depreciation because depreciation is a major component of property, plant, and equipment. The depreciation for IFRS or IAS16 is the same similar to USGAP, it's based on the estimated life and there is a residual value if there is one. The depreciation method, this is basically the rule which is very general, generous general rule just like USGAP. The depreciation method should reflect the pattern in which the asset future economic benefit are expected to be consumed. So how are you gonna consume this asset? Use the depreciation. Now straight line may not always be appropriate but they're pretty flexible. If you think this asset's gonna serve you equally use the straight line. If you think you're gonna use it more early in its life use maybe the some sort of a cost recovery system that's accelerated in accelerated cost recovery system. Treat any changes prospectively. What does that mean? It means there's any changes in depreciation. The life of the asset, you change the life of the asset, you change its residual value. You don't have to go back and change any prior period just like take this asset and make the change and look into the future prospectively. Now again, if you don't know how depreciation works well you can go to my, you guessed it, intermediate accounting. But there's something in an IFRS that we don't have any USGAP and that is called component depreciation. Now this is different. Component depreciation is something that we don't have in IFRS. Okay. So when an item of PPNE is comprised of significant part for which different depreciation method or useful life are appropriate each must be depreciated separately. In simple English, what does that mean? When the item, so we might have one item but that item is it has sub components, sub component. Well, guess what? Then you can take each asset within that sub so you can, rather than looking at the asset itself one asset you could take the asset and take it at sub component and deal with it separately. And this is what we mean by, this is what we mean by depreciated separately. Component can be physical such as aircraft engine or non physical such as major inspection. Now just FYI component depreciation it's not commonly used under USGAP. So that's really a special IFRS rule but let's take a look at an example pretty straightforward. I think we have something similar in USGAP we don't call it component depreciation we call it asset segregation. It's similar but not the same. So I'm just gonna say similar but not the same, okay? And I know this because what I used to work in my public accounting firm we used to specialize in asset segregation and I believe it's the closest thing to component depreciation but to look at component depreciation how it all fits, let's work an example. So Air Canada, so this is the quote from Air Canada annual report. So the corporation allocate the amount initially recognizing respect to an item of property, brand and equipment to its significant component and depreciate them separately. So they use this method. So it's just like take a look at an example and see how this method works in the real world. Suppose on January 1st, year one, Air Canada acquire a piece of baggage handling machine with an estimated useful life of 10 years for 120,000. So they bought and that's pretty straightforward if you ever travel there's baggage handling machinery, okay? And you're hoping you're gonna find your luggage there and they paid 120,000 for it. Now here's how it works. They looked at the asset and they find out the machine has an electrical motor that must be replaced every five years. So what they said is the electrical motor is as a separate component, okay? Then the whole machine and it's estimated a cost of $10,000 to replace. So they have a $10,000 to replace. So basically the electrical motor is worth $10,000. That's what we're saying here. So it's a separate asset. In addition by law the machine must be inspected every two years. Now the inspection cost is 2000 under IFRS, inspection cost if it's mandated it's considered kind of a part of the asset. So how are we gonna depreciate the asset? We're gonna have three assets here. We're gonna have the motor. We're gonna have the inspection and we're gonna have the machine itself. The motor has a cost of $10,000 useful life of 10 years. Depreciation is $2,000 per year. So we'll depreciate the motor separately. The inspection is $2,000. The useful life is two years. Therefore the inspection, we're gonna have depreciation of $1,000 for year one for two years. The machine what's left because remember 120, we allocated 8,000 to the motor, 2000 to the inspection. We are left to run away and this is gonna be a 10 year machine, 10,800. Therefore year one, 13,800. What we did is we took the asset and we decompose it. Once again, something similar in concept we have what's called asset segregation under US gap. I believe the last topic we're gonna look at and explain is they call derecognition and what is derecognition? It's the removal of an asset or reliability from a balance sheet. Just like the opposite of recognition. Let me just, my pen is not working now. So what is recognition? Recognition is when you put something is when you put something on the balance sheet. Recognition, derecognition, D is the kind of the opposite when you remove it from the balance sheet. So the carrying amount of an item must be recognized. So you de-recognize, take it out. When you dispose of it, you sell it, you exchange it or when there's no future economic benefit are expected from its use. So just basically you're no longer using it and you need to take it out, okay? Any gain or loss arising from the derecognition of an item is included in that income and we talked about that if we did an exchange earlier, okay? Now if we dispose of it as long as we get more than the book value we have a gain, if we have less than the book value we have a loss. When it comes to that derecognition again if you're interested in this selling an asset go to my intermediate accounting course, okay? Now once an asset is de-recognized what does that mean? It means we took it out of property, plant and equipment. It should be reclassified as non-current asset held for sale. So once it's no longer an operation it cannot be placed with PPNE because it's no longer PPNE. Now it's considered in a sense held for sale. It's some sort of an, not an investment but it's an asset held for sale. It's not inventory. It's not an investment. It's just an asset held for sale, okay? So IFRS five now will apply to it. Non-current asset held for sale and discounted operation provide guidance with respect to the accounting treatment for non-current asset, okay? And so now we're dealing with IFRS five once the asset is held for sale, okay? I might work an example or two or three about property, plant and equipment just to expose you a little bit more to the topic. If you have any questions, any comments please email me. 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