I had an exam today regarding IFRS and I have a question to one of the exam tasks.
Background:
A company that is operating in the field
of yacht rentals wants to buy a new yacht (Numbers are irrelevant right now). Which IFRS standard is applicable regarding that?
So my first thought was IAS 2 inventories but in the end I decided to use IAS 16 PPE due to question b)
I also think IAS 16 is correct but can someone explain me why IAS 2 inventories is wrong?
Thank you
Accounting for e.g. a Yacht
Re: Accounting for e.g. a Yacht
As you're learning IFRS, it will be most useful to you if you arrive at the answer yourself
so have a read and let us know what you think, IAS 2 or IAS 16 and why?
https://ifrscommunity.com/knowledge-bas ... isclosure/
https://ifrscommunity.com/knowledge-bas ... isclosure/
so have a read and let us know what you think, IAS 2 or IAS 16 and why?
https://ifrscommunity.com/knowledge-bas ... isclosure/
https://ifrscommunity.com/knowledge-bas ... isclosure/
Re: Accounting for e.g. a Yacht
Thank you for your input. Re-reading IAS 16 the answer is clear to me.
„are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
are expected to be used during more than one period.“
I just wasn’t 100% sure at the time.
„are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
are expected to be used during more than one period.“
I just wasn’t 100% sure at the time.
Re: Accounting for e.g. a Yacht
I'd say IAS16 also because real estate companies that are in the rentals business recognize their acquisitions according to either IAS16 at cost either IAS40 at fair value.
So I'd say IAS16
So I'd say IAS16
Re: Accounting for e.g. a Yacht
Yes, I totally agree. In my examples, the Yacht is held for rental to others so it is definitely IAS 16.
Re: Accounting for e.g. a Yacht
Maybe they lease it rather than buy