Cessation of depreciation

[Lasa1]

Hello,

Can the depreciation be stopped in the below two scenarios:
Scenario 1
Legal Entities (LE) A and B belong to the same group. A has some production machines that are not used anymore and will be transferred in few months to legal entity B where they will continue to produce.As equipment is not used in A, can this LE stop the depreciation? If not, legal entity A will have some depreciation expenses but not revenue linked to them.

Scenario 2
Production equipment is already available for use, but it is not producing yet since the design of the product is not finalized.
PWC guidance states that “PP&E is considered ready for its intended use when it is first capable of producing a unit of product that is either saleable or usable”. But what if the equipment is ready but the product is not yet finalized?

https://viewpoint.pwc.com/dt/us/en/pwc/ ... nting.html

Also PWC guidance states that “certain conditions my prevent a long-lived asset from being considered available for its intended use”. What are those conditions?
Any reference to documents that could serve as guidance are welcome
Thanks

[Ketan Marwah]

Hi,

Both the scenarios are that of Idle assets so you would continue to depreciate them as for the assets service potential being consumed unless UOP method is used. Refer this link: https://ifrscommunity.com/knowledge-bas ... sed-assets

Also PWC guidance states that “certain conditions my prevent a long-lived asset from being considered available for its intended use”. What are those conditions?

For example, if FDA approval is required before a pharmaceutical company can start to manufacture a new drug for sale, depreciation of the manufacturing equipment will generally not commence until the relevant FDA approval is obtained.